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Euro falls to lowest since 2002 on concerns over energy prices

 

“Success usually comes to those who are too busy to be looking for it.” — Henry David

 

 

HEADLINES

 

  • Euro falls to lowest since 2002 on concerns over energy prices
  • Gold languishes near December low as robust dollar weighs
  • Oil prices fall in volatile trade on recession fears
  • European shares climb as Norway oil strike ends
  • Treasury yields jump in choppy trading, yield curve remains inverted
  • EUR/GBP to soar towards 0.8861/76 on a break above key resistance at 0.8722/47 – Credit Suisse
  • EURJPY Near Term: Downside favored

 

 

Euro falls to lowest since 2002 on concerns over energy prices

The euro tumbled to a new two-decade low on Wednesday as fears over rising energy prices and potential shortages cast a long shadow over the bloc’s economy, while demand for safe-haven assets drove the dollar to fresh 20-year highs.

All oil and gas fields that were affected by a strike in Norway’s petroleum sector are expected to be back in full operation within a couple of days, Equinor said on Wednesday.

Meanwhile, Goldman Sachs raised its natural gas price forecasts, saying that a complete restoration of Russian gas flows through Nordstream1 was no longer the most likely scenario.

 

 

COMMODITIES

 

Gold languishes near December low as robust dollar weighs 

 

Gold prices hit a near seven-month trough on Wednesday as a stronger dollar and increasing rate-hike bets dented the zero-yielding bullion’s appeal.

Spot gold fell 1.55% to $1,736.40 per ounce, after falling as much as 2.6% on Tuesday. U.S. gold futures were down 1.60% to $1,735.7.

The rival safe-haven dollar climbed to a near two-decade peak, making greenback priced-bullion less attractive among overseas buyers. “With the Fed still expected to hike rates aggressively at the coming meetings, expect gold to stay under pressure in the near term,” said UBS analyst Giovanni Staunovo, adding, gold could trade down to $1,700/oz by year-end.

 

 

ENERGY

 

Oil prices fall in volatile trade on recession fears 

 

Oil prices fell in volatile trading on Wednesday, extending Tuesday’s heavy losses as growing fears of a global recession outweighed supply concerns.

Brent crude futures fell by $1.33, or 1.29%, to $101.44 a barrel, having risen by more than $3 earlier in the session.

Both contracts had registered their largest daily falls since March on Tuesday, with WTI closing below $100 for the first time since late April.

Goldman Sachs on Wednesday said that the oil sell-off has been driven by growing recession fears.

 

 

STOCKS

 

European shares climb as Norway oil strike ends 

 

European shares rallied on Wednesday after Norwegian oil and gas workers ended their strike, easing energy supply worries, while Just Eat Takeaway.com jumped 15.5% after Amazon agreed to buy a stake in its Grubhub business.

The continent-wide STOXX 600 (.STOXX) was up 1.7%, after ending 2.1% lower in the previous session when the strike in Norway threatened to cut energy supplies and severely dented the euro which continued its slide on Wednesday.

Gains were broad-based with consumer staples, and tech stocks among the biggest gainers. The energy sector (.SXEP) declined as oil prices dropped to 12-week lows on recession fears.

 

Treasury yields jump in choppy trading, yield curve remains inverted 

 

Market pros track the spread between longer duration Treasury yields and shorter duration yields, with the former typically higher. However, the 2-year Treasury yield climbed nearly 10 basis points to 2.914% on Wednesday, holding above the 10-year.

That so-called inversion, particularly if sustained, is often interpreted as a warning sign that the economy may be weakening and a recession could be on the horizon. The 2-year to 10-year curve first inverted March 31, then again briefly in June.

 

 

ANALYSIS

 

EUR/GBP to soar towards 0.8861/76 on a break above key resistance at 0.8722/47 – Credit Suisse 

 

“We stay biased higher over the next 2-4 weeks, with key resistance remaining at the recent and April 2021 high at 0.8722, with the 50% retracement of the fall from September 2020 at 0.8747. Beyond here in due course should then add weight to our view that a broader basing process is underway, with resistance seen next at the ‘neckline’ to the 2020 top and 61.8% retracement at 0.8861/76.”

“Next key support moves to 0.8524/11, which coincides with the rising 55-day average, which we would look to hold if reached to maintain our 2-4 week positive outlook.” 

 

 

CHART

 

EURJPY Near Term: Downside favored

 

Technical View: Short position below 139.3. Target 137. Conversely, break above 139.3, to open 140.2.

Comments: The pair remains under pressure. Further weakness favored.

 

 

 

Source: Trading Central 

 


 

CALENDAR

 

*Times in GMT

 

 

Source: FX Street Economic Calendar

 

 

 

SOURCES 

 

https://www.cnbc.com/2022/07/06/currencies-dollar-euro-recession-inflation-growth.html
https://www.cnbc.com/2022/07/06/gold-interest-rates-us-dollar-safe-haven.html
https://www.cnbc.com/2022/07/06/oil-markets-opec-supply-recession.html
https://www.reuters.com/markets/europe/european-shares-climb-just-eat-takewaycom-boost-2022-07-06/
https://www.cnbc.com/2022/07/06/treasury-yields-mixed-amid-market-volatility-as-yield-curve-remains-inverted.html
https://www.fxstreet.com/news/eur-gbp-to-soar-towards-08861-76-on-a-break-above-key-resistance-at-08722-47-credit-suisse-202207061333

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