Today Wednesday, July 07, 2022, has seen the Euro fall to a 2-decade all-time low. And the reasons are somewhat evident: almost everyone fears a potential increase in energy prices and a resulting scarcity of energy supply.
Euro today crashed by 0.7% against the US dollar to 1.0186 for the first time since December 2002.
All oil & gas fields affected by Norway’s petroleum sector’s strike are expected to resume operation within the next couple of days, according to a statement by Equinor on Wednesday. On the contrary, Goldman Sachs has raised the price forecasts of natural gas under the guise that a complete restoration of Russian gas flows via Nordstream1 was now unlikely.
Nonetheless, despite these dramatic turns of events, analysts still expect a quick recovery in oil prices. According to Moritz Paysen, a forex & rates adviser at Berenberg, Euro isn’t only affected by the threat of gas’ non-delivery. Instead, the already high costs of energy are also a burden.
In his words, “It is not only the threat of non-delivery (of gas) that is weighing on the Euro. The already high energy costs are a burden. Energy costs in Europe are many times higher than in the US.”
Don’t forget that consumers across the Euro zone have reportedly cut spending on drinks, foods, and tobacco consistently for 2 months since May due to a spike in the prices of these commodities, as reported by the European Union statistics office Eurostat earlier today, Wednesday, July 06, 2022. Remember, Pound also recently rose against the US Dollar and Euro particularly because of the increasing interest rates prospects. And with Euro crashing even lower, we all might be forced to ask and wonder where else we are headed and how much worse can the situation become?