“the landslide risk for the Euro” – the currency experts of Commerzbank chose in your market comment strong words, as they described the development of the Euro. Since December, the common currency has lost 3.5 percent against the Dollar. Since the mid-2018 is over 13 percent. With a value of just under $ 1.09 to the Euro, tends to be so low in mid-2017. “I see nothing, what could help the Euro,” says Commerzbank currency expert Ulrich tube man
A weak Euro is good for the economy, because Goods from outside the Euro area are more favourable. However, the Goods which come from abroad in the Eurozone will be more expensive on the other side. Oil for instance is traded in dollars. The weaker the Euro, the more need to pay the consumer. This may be pleased ECB Chief Christine Lagarde, a lot of consumers and savers have no interest. The more important it is to think about the reasons for the downward trend of the Euro. US Dollar / Euro (USD/EUR) 0,9188 EUR -0,0007 (-0,08%) OTC
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Corona pandemic leads to escape to the safe haven Dollar
Burdened the Euro, especially from the Corona-Pandemic in China. Investors fear that the pandemic is likely to weigh on the Chinese economy and the world economy continues to be difficult.
In the case of high economic uncertainty escape investors in the safe haven of the Dollar, which is why he is gaining against the Euro. In turn, the Euro dropped to just under $ 1.09 per Euro, near the lowest levels since may of 2017.
The Chinese government is in trouble: the longer the factories are closed, the more the economy is depressed performance. If the factories do not record, however, too early in the operation, while the Virus is still under control, increases the number of Infected strong, which pushes very quickly the economic performance.
Because of these Fears, the interest rates for ten-year-old Chinese bonds are broken to just 2.85 per cent. So you are only around 20 basis points above the record low of 15. August 2016 (2.64 Per Cent).
The bond market assesses the long-term prospects of the Chinese economy as a very turbid, especially since the interest rates are far below the rate of inflation of tart 5.4 percent. The longer the Concerns of the investors to the Chinese economy persist, the longer the Euro should remain against the Dollar on a downward spiral.
US economy is showing clear signs of a
A slowdown in China impacted the US economy greatly, would, however, export the export-dependent U.S. companies less to China. The Corona pandemic comes, therefore, at the worst possible time for the US economy has shown recent significant Brake marks.
Indeed, had been created in January, with 225,000 Jobs significantly more, so economists had predicted (of 165,000 Jobs). Nevertheless, the interest rates on ten-year US break-in bonds after the numbers template.
Why? The Ministry of labour had at the same time corrects the data for the year 2019-to-bottom. Therefore, it was the end of December only 152.4 million Jobs in the United States, the goods 422.000 less than originally reported. Fewer jobs mean less purchasing power, and thus less demand, which is weighing on the US economy.
Therefore, the interest rates for ten-year U.S. bonds, with just under 1.6 percent to only around 20 basis points above the record low set in July 2016. The bond market used to estimate the long-term prospects of the highly indebted US economy is as bad as ever before. However, this fear even more for a flight into the Dollar, which is weighing on the Euro.
Contrary to the assertion of many experts that the U.S. economy will continue to run well, could provide a sustained decline in the U.S. interest to ensure that the fears of a recession, investors ‘ return, which would support the Dollar. A more accurate view of investors on Friday, 14. February data on U.S. retail sales and industrial production to look at.
Slips the Euro-Zone in a recession?
For additional downward pressure on the Euro and the persistently poor economic data from the Euro-Zone, especially from Germany. (You can do this in the post “A crisis signal for the global economy to sound as loud as it has been for years” reference.)
The Problem is that the Figures from other Euro-area countries such as France and Italy continue to disappoint in a row, weighing on the Euro. The industrial production in France fell in December 2.8 percent compared to the previous month, economists had only said a fall of 0.3 percent previously. That was of course before the announcement of the Corona pandemic.
in Addition, the industry had shrunk production in Italy in the same month, by 2.7 percent compared to the previous month, instead of the expected minus 0.1 percent. Such Figures and the impact of the pandemic can investors fear that the Eurozone could soon slide into recession, especially as the economic power had grown in the fourth quarter to a mere 0.1 percent compared to the previous quarter.
Continuing weak data from the Euro-Zone is likely to intensify the downward pressure on the Euro, especially as the risk rises that the ECB will respond and the penalty interest rate in the presses, which would weigh on the Euro. “The Bank of Japan and the Swiss national Bank hardly anyone, that you could make Corona would be male, landing, green Mars, or else what will trigger a global recession, with their monetary policies significantly more expansive. As the respective managers may emphasize ever so often your supposed room for manoeuvre,“ explains light man. “With the ECB, that’s something else. Too often, Europe’s monetary watchdogs with new Tricks (and without regard to what was conceded to the former Interpretation to them in the agreement) have made their monetary policy more expansionary. A recession would threaten, would the ECB – as many are sure – new Bazookas from the weapons depot pick up.“
The downward trend of the Euro is likely to continue. As long as the Corona-pandemic impacted the Chinese economy, while the Fears of investors increase prior to a possible recession in the United States and the Euro Zone should remain the common currency versus the safe haven Dollar on a downward spiral. Thus, the Five-year may back-lows of just below 1.05 dollars per ounce quickly closer. Take it away! Say goodbye to four thinking errors to become finally rich FOCUS Online, away with it! Say goodbye to four thinking errors to become finally rich
