Euro continues to weaken against the dollar
The euro has fallen to its lowest level in 20 years and is settling below parity against the dollar. At 0.9909, the common currency reached Tuesday the lowest value since the end of 2002 and remained further below parity with the dollar, which was reached again the previous day, with a minus of 0.1 percent. In July, the threat of recession in the euro zone and the growing interest rate gap with the United States had caused the euro to slip below one dollar for the first time since 2002.
Even better-than-expected economic data failed to lift the euro above the one-dollar mark. High inflation and rising interest rates caused the German economy to contract in August by the most since the early days of the Corona pandemic more than two years ago. The much-watched Purchasing Managers' Index for the private sector - industry and services combined - fell 0.5 points to 47.6. This puts the barometer well below the 50 mark above which it signals growth. Economists had actually expected a slightly stronger decline to 47.4 points in the run-up.
"In view of high energy prices, wage pressure, material bottlenecks, supply chain issues, a shortage of skilled workers and a weaker global economy, companies are facing a lot of headwinds," said Commerzbank analyst Antje Praefcke. Already at the beginning of the week, recession worries had increased further after Russian exporter Gazprom announced that Germany would again temporarily not receive gas through the Nord Stream 1 Baltic Sea pipeline at the turn of the month. The anxious question for the market was therefore whether the gas flow might soon dry up completely, Praefcke stated.
These concerns had also pushed the stock markets sharply into the red on Monday. After an equally weak start today, Tuesday, the Dax was able to at least get back above the zero line. At noon, the German benchmark index stood at 13,249 points, up about 0.1 percent. The euro zone index Euro Stoxx 50 fared similarly. It gained 0.1 percent over the course of the day to 3661 points.
Photo by Omid Armin