Euro stumbles on Putin gas threat

The euro fell back on Thursday following a threat from Russian President Vladimir Putin to cut off gas supplies to ‘unfriendly countries’ unless they agree to new payment terms.

Meanwhile, the pound is subdued so far this morning, with GBP/EUR dipping to €1.1848 and GBP/USD muted at $1.3119. GBP/CAD is rangebound at C$1.6426, while GBP/AUD and GBP/NZD hold steady at AU$1.7547 and NZ$1.8976, respectively.

Centre stage today will be the latest US non-farm payroll release. Will a robust payroll print light a fire under the US dollar this afternoon?

What’s been happening?

The euro retreated yesterday as EUR investors were spooked by Vladmir Putin’s threat to stop gas exports to ‘unfriendly countries’ who are unwilling to pay in roubles.

While the EU imports a large part of its gas from Russia, the bloc is refusing to bow to Putin’s threats, stoking concerns that the EU’s energy supplies could be disrupted as the new payment terms come into effect today.

The US dollar, struck higher on Thursday, with the currency being underpinned by a risk-off mood as well as the latest PCE price index, which reported another acceleration of US inflation last month.

At the same time, the pound got off to a steady start during yesterday’s European session on the back of stronger-than-expected UK GDP figures, before being undermined by souring market sentiment.

What’s coming up?

In the spotlight today will be the latest US non-farm payroll print, which could help to bolster the US dollar.

March’s data is expected to report the US economy added roughly 500,000 jobs. A solid increase which could bolster confidence within the Federal Reserve to hike interest rates more aggressively at its May policy meeting.

In the meantime, the focus for EUR investors will be on the Eurozone’s consumer price index. Will another record rise in inflation bolster the euro on hopes it will pressure the European Central Bank (ECB) into raising interest rates?

Finally, the pound could struggle to find momentum this morning as the UK’s cost-of-living crisis is back in the spotlight on what is being dubbed ‘Bleak Friday’, with price rises for many household bills set to come into effect today.