Dhe euro has fallen to its lowest level in 20 years and is settling below par with the dollar. At 0.9909 on Tuesday, the common currency hit its lowest value since the end of 2002 and fell 0.1 percent below the parity it had reached against the dollar again the previous day. In July, the looming recession in the euro zone and the growing interest rate differential with the United States 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. In August, high inflation and rising interest rates caused the German economy to shrink more than it had since the beginning of the corona pandemic more than two years ago. The well-regarded purchasing managers’ index for the private sector – industry and the service sector together – fell by 0.5 points to 47.6 points. The barometer is thus well below the 50 mark, from which it signals growth. Economists had even expected a somewhat sharper decline to 47.4 jobs in advance.
“In view of the high energy prices, wage pressure, material bottlenecks, supply chain problems, the shortage of skilled workers and a weaker global economy, companies are facing a lot of headwind,” said Commerzbank analyst Antje Praefcke. Worries about a recession had already increased at the beginning of the week after the Russian exporter Gazprom had announced that at the end of the month Germany would again temporarily receive no gas through the Baltic Sea pipeline Nord Stream 1. The anxious question for the market is therefore whether the gas flow may soon dry up completely, Praefcke stated.
These concerns also pushed the stock exchanges sharply into the red on Monday. After an equally weak start on Tuesday, the Dax was at least able to get back above the zero line. At noon, the leading German index was at 13,249 points, up around 0.1 percent. The Eurozone index Euro Stoxx 50 fared similarly. He gained 0.1 percent to 3661 points over the course of the day.
