The euro has slumped to a two-decade low today; even the surge in the European gas price has added more worries about a recession. On the other hand, the US dollar was not stopping to surge; its treasury yields staged a rebound. The euro faces many economic shocks from the ongoing war in Ukraine. Hence there has been a surge in food and energy prices due to conflict.
Stefan Hartung, the CEO of German engineering and technology giant Bosch, said, "for sure, we see a big recession in the making, but that's exactly what we see in its making. There is still an overhanging demand because of the COVID crisis we are just about to leave."
The inflation in the eurozone has now hit a record of 7.5% in March. The European Central Bank has remained more attentive than England and the US federal Banks, as both of these banks have begun hiking interest rates because of inflation. The ECB, however, now expects to conclude its net asset purchases under its APP in the third quarter, after which it will have room to begin monetary tightening, depending on the economic situation.
The European zone inflation hit a high record of 8.6% in June, due to which the ECB will give the markets advance notice of its intention to increase its interest rate for the first time in a decade.
Due to the ongoing war, the natural gas prices in Europe have now climbed. The front-month gas price at the Dutch TTF hub, a European benchmark for natural gas trading, was seen trading up 7.8% to hit 17.5 euros. Due to these factors, the euro currency is facing a low time. Since last year, the currency has lost over 9% of its value against the dollar.
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