Financial News on July 12th, the euro hit the parity mark of 1.0000 against the US dollar and fell to its lowest level since December 2002.
Since this week, the euro has continued to decline against the US dollar. The dollar was boosted by fears that the energy crisis would put the euro zone in recession, and the Fed was boosted by expectations that the Fed would raise interest rates faster and more dramatically faster than other central banks. On Monday, the US dollar index rose to 108.27, the highest since October 2002, and finally closed up 1.21% to 108.21. The US dollar index rose more than 12% year-on-year.
German energy minister and French finance minister warned last Sunday that Russia could retaliate against sanctions by reducing natural gas supply. Goldman Sachs warned that if Russia's natural gas supply was completely interrupted, the economy could experience a more serious decline. The downside risk of the euro will increase in the coming weeks, and the euro is expected to fall below parity to around 0.96 against the US dollar.
The microcosm of economy! The outlook for economic growth in the euro zone is bleak.
On Monday, Nord Stream 1, the largest single pipeline for natural gas to Germany, began annual maintenance, and gas supply is expected to be stopped for 10 days, but the market is worried that due to the conflict between Russia and Ukraine, the closure may be extended and may undermine plans to fill inventory for winter. Investors worry that Europe could fall into recession if Russia fails to restore gas supply after completing pipeline maintenance.
On the same day, Germany's 10-year government bond yield fell to its lowest level since last Wednesday, and then narrowed its decline; German stocks underperformed the euro zone. The money market has cut its bet on the ECB rate hike, with a rate hike expected to be 146 basis points this year, down from the 147 basis points forecast last week. Italian government bonds underperformed German government bonds, and the interest rate spread of Italian German government bonds widened by 2 basis points.
Euro Group said on the 11th that due to adverse factors such as high energy prices and deteriorating global trade conditions, 19 member states in the euro zone are now facing further inflationary pressure, and at the same time, the outlook for economic growth in the euro zone has been weakened. On the same day, the finance ministers of eurozone member countries held a meeting in Brussels to focus on economic recovery. In a statement issued after the meeting, all parties emphasized that the fiscal policies of all countries should aim at maintaining debt sustainability and should avoid the imposition of inflationary pressure to better achieve the monetary policy goal of maintaining price stability.
This article is from the financial industry
