Meanwhile former Brexit Party MEP Rupert Lowe, a staunch critic of the monetary union, suggested it was doomed to “end in tears”. The latest surge in European gas prices added to the region’s recession worries, with the single currency, used by the 19 EU states which are members of the Eurozone, falling by 1.2 percent against the dollar. Norway’s crown tumbled by the same amount as gas workers there went on strike.
German journalist Holger Zschaepitz, author of Schulden ohne Suhne? A Book on States, tweeted: “OUCH! #Euro sank to a 20y low against the US Dollar as investors pared bets on #ECB interest-rate hikes given the growing risk of a recession in the region.
“Euro fell as much as 0.9 percent to 1.0331, its weakest level since December 2002.”
Mr Lowe told Express.co.uk: “The Euro is an index not a currency backed by the GDP of a Sovereign State. The ECB has ignored rocketing inflation, is run by somebody with a questionable pedigree, and has continued with QE and other market distorting antics such as supporting Italy’s unsupportable debt in order to protect the Euro.”
The concept of binding the different cultures and economies of Europe together via a “mongrel currency” as a necessity to “preserve the post-war central planners’ bureaucratic” dream has reduced Southern Europe to “penury”, Mr Lowe claimed.
He added: “It will end in tears and the question then is to whom do the holders of Euros turn for their debt.
“Is it the country where the note was printed or is it only good for wallpapering the loo? It has further to fall unless interest rates rise substantially.”’
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One frontline trader suggested a major Dollar order in early trading, coupled with the energy price worries, had caused a chain reaction, spilling into equity markets and bond markets as then speeding the euro’s fall as it broke through its 2017 low of $1.0340. As of 1.45pm today (Tuesday) the euro was valued at $1.03.
Stuart Cole, head macro economist at Equiti Capital, said: “The fear of recession is once again becoming stronger.”
ECB President Christine Lagarde yesterday tweeted: “We are in the midst of multiple crises, including climate change, that are challenging our society and economy.
“Within our mandate, we are taking concrete steps to incorporate climate change into our monetary policy operations.”
A Sentix survey published yesterday showed investor morale in the eurozone fell this month to its lowest level since May 2020, pointing to an “inevitable” recession.
Producer prices for the region, meanwhile, rose less than expected, data showed. This comes after consumer prices hit a record high, cementing the case for an interest rate hike by the ECB.
Investors will now be watching for minutes of the ECB’s previous rate meeting on Thursday.
John Woolfitt, director of trading at Atlantic Capital Markets, said: “ECB minutes will certainly give a bit more colour into what’s going on behind the scenes.
“We are cautiously optimistic, but we are also seeing the opportunity when the market has a big bounce up to short into those moves because they don’t seem to have the depth.”
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