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Euro stumbles amid growing European energy concerns

currency-newsEuro stumbles amid growing European energy concerns
The euro trended lower on Thursday, undermined by fresh fears over Europe’s energy supplies.

Trade in the pound is mixed so far this morning, with GBP/EUR muted at €1.1694 and GBP/USD sliding to $1.2122. GBP/CAD is rangebound at C$1.5655, while GBP/AUD and GBP/NZD rally to AU$1.7765 and NZ$1.9590, respectively.

Coming up will another jump in Eurozone inflation help to bolster the euro today?

What’s been happening?

The euro stumbled yesterday, knocked by renewed concern over European energy security as Fitch Ratings suggested that signs that the continent will need to start rationing gas is increasing the risk of a Eurozone recession.

Tempering these losses were some upbeat EUR data releases, with German retail sales rebounding faster than expected and Eurozone unemployment falling to a new record low.

The US dollar initially rallied on Thursday, with investors favouring the safe-haven currency amid another equity sell off triggered by renewed recession fears.

The ‘greenback’ then erased some of these gains later in the session following the release of the core PCE price index. The Federal Reserve’s preferred indicator of US inflation falling to a six-month low in May.

The pound, meanwhile, traded without any strong directional bias yesterday, finding some support amidst a modest improvement in risk appetite in the second half of the session but largely begin shaped by the movement of its peers.

What’s coming up?

The spotlight today is likely to be on the publication of the Eurozone’s consumer price index.

June’s preliminary release is expected to report inflation in the bloc climbed to a new record high, potentially boosting the euro as it strengthens European Central Bank (ECB) rate hike bets.

However, in light of Germany’s underwhelming CPI figures could we see the Eurozone release also underperform and drag on EUR exchange rates this morning?

Also of note today will be the publication of the latest ISM non-manufacturing PMI in the US. If June’s index shows another slowing of US factory sector activity the US dollar could fall.

Meanwhile, the finalised release of June’s manufacturing PMI in the UK could leave the pound on the back foot today if it is revised lower.
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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