Euro hits lowest level in two decades as energy crisis intensifies – business live

Introduction: euro at two-decade low

Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.

The euro has sunk to a fresh two-decade low as surging gas prices fuel concerns over the eurozone economy.

The single currency has dropped as low as $0.991 against the US dollar this morning, its weakest point since 2002, as fears of a European recession and more aggressive US interest rate rises both rattle the markets.

The euro vs the US dollar over the last 20 years Photograph: Refinitiv

The euro came under renewed pressure as wholesale energy prices rocketed on Monday, after Russia announced it would halt natural gas supplies to Europe via the Nord Stream 1 pipeline for three days at the end of the month, for maintenance.

Last night, the benchmark European gas price settled at its highest closing price on record, having surged during August on fears that Moscow is squeezing energy supplies.

CHART OF THE DAY: European benchmark natural gas (Dutch TTF) closes the day at €276.75 per MWh, a record high settlement price

(There were higher **intraday** prices in early March, but TTF never closed the day with a **settlement** as high as today) pic.twitter.com/26nFVhUEzH

— Javier Blas (@JavierBlas) August 22, 2022

n”,”url”:”https://twitter.com/JavierBlas/status/1561751863598407687″,”id”:”1561751863598407687″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”07b0dbfd-0220-416b-8c5d-043d0fe4145d”}}”>

CHART OF THE DAY: European benchmark natural gas (Dutch TTF) closes the day at €276.75 per MWh, a record high settlement price

(There were higher **intraday** prices in early March, but TTF never closed the day with a **settlement** as high as today) pic.twitter.com/26nFVhUEzH

— Javier Blas (@JavierBlas) August 22, 2022

Europe’s benchmark electricity price jumped more than 25% on Monday to pass €700 per megawatt-hour for the first time, around 14 times the seasonal average over the past five years.

OOPS! German benchmark electricity price jumped >25% on Monday to pass €700 per megawatt-hour for the first time. The level is about 14 times the seasonal average over the past five years. pic.twitter.com/gMQZkk7ncB

— Holger Zschaepitz (@Schuldensuehner) August 22, 2022

n”,”url”:”https://twitter.com/Schuldensuehner/status/1561697025749557248″,”id”:”1561697025749557248″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”6abd673b-067e-4063-8184-a1cf35474ddf”}}”>

OOPS! German benchmark electricity price jumped >25% on Monday to pass €700 per megawatt-hour for the first time. The level is about 14 times the seasonal average over the past five years. pic.twitter.com/gMQZkk7ncB

— Holger Zschaepitz (@Schuldensuehner) August 22, 2022

Jim Reid of Deutsche Bank told clients that the energy crisis had intensified.

Starting in Europe, the energy crisis intensified yet further, after news over the weekend that Nord Stream would be shut for maintenance at the end of the month introduced fresh fears it would not re-open.

European natural gas prices ratcheted +14.59% higher to €280/MWH, a record high. German power prices surged +18.60% to another record as well, closing at €663 and breaching €700/MWH intraday for the first time ever.

This summer’s heatwaves have already strained Europe’s energy supplies. Such high prices will hurt households badly, while disruption during the winter months could be devastating for business activity.

Tapas Strickland, a director of economics at National Australia Bank, says:

“Europe’s dire energy situation suggests the peak of inflation is not here yet and the risk remains that high inflation is sticky for longer without further aggressive central bank action.

“No surprise then to see the dollar at near multi-decade highs against a falling euro and British pound.”

this is looking exponential now: pic.twitter.com/5eGpdCC6Ac

— BionicBanker (@BrokenBanker) August 22, 2022

n”,”url”:”https://www.twitter.com/BrokenBanker/status/1561687283530620929″,”id”:”1561687283530620929″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”9c948456-0837-421b-814b-a3f53748cbb8″}}”/>

While energy shortage fears hit the euro, the dollar is in demand. Traders are anticipating the Federal Reserve will continue to lift US interest rates to battle inflation, despite the slowdown in the global economy.

Traders on the floor of the New York Stock Exchange last night. Photograph: Brendan McDermid/Reuters

Wall Street saw its worst day since June last night, with the Dow Jones Industrial Average dropping 2% as the summer rally fizzled out.

Also coming up today

The latest surveys of purchasing managers across Europe will show the damage caused by soaring energy prices and extreme weather this summer, including low water levels on the Rhine.

August’s flash purchasing managers surveys are expected to show that eurozone factories shrank again this month, while the services sector struggled.

Michael Hewson of CMC Markets has the details:

Surging energy prices, along with sharply declining water levels on the Rhine have cut the rug out from the manufacturing sector in Germany with today’s August flash PMI expected to see a further decline from 49.3 to 48, while services activity is also expected to slip further from 49.7 to 49.

In France the picture isn’t any better, although the services sector is benefitting from a bit of a tourism boost, however the forest fires could well pull economic activity here down quite a lot more. In manufacturing economic activity is likely to slip to 49, from 49.5, while services could slip from 53.2 by a lot more than the 53 that is currently being forecast.

In the UK, the picture is slightly better, but the PMI survey could show a slowdown in growth.

With August being a slow period due to holidays, we could well start to see economic activity on the PMI level start to slide into contraction territory, from 52.1 for manufacturing in July and from 52.6 for services in July.

The agenda

9am BST: Eurozone flash manufacturing and services PMI survey for August
9.30am BST: UK flash manufacturing and services PMI survey for August
11am BST: CBI survey of industrial trends
2.45pm BST: US flash manufacturing and services PMI survey for August
3pm BST: Eurozone consumer confidence survey for August
3pm BST: US new home sales for July

Sterling is also under pressure against the US dollar this morning.

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The pound has dropped by almost half a cent to $1.172 against the dollar, the weakest since March 2020 (when the Covid-19 pandemic rocked global markets).

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Britain’s surging energy costs and weakening economy have weighed on the pound, with families facing rocketing energy bills.

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As Jane Foley, head of FX strategy at Rabobank in London, explained yesterday:

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n

“The weak UK growth outlook continues to weigh on the pound. News that Ofgem is set to announce on Friday that UK average annual household energy bills are likely to rise to more than £3,500 pounds reinforces the headwinds facing consumers.”

n

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European gas prices are being driven higher by concerns over supplies from Russia (Gazprom has cut flows through Nord Stream 1 pipeline this summer), and also rising demand.

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On the latter point, James Huckstepp, head of EMEA gas analytics at S&P Global Commodity Insights, explains:

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n

The recent hot, dry, and relatively still (non-windy) weather is as bullish as it gets for summer gas demand.

n

This translates to high air-conditioning load, low hydro-generation (along with other nuclear and coal fired generation issues that come along with low-river levels), and then relatively low wind generation.

n

Regarding price-driven demand destruction—although it is visible both in the data and anecdotally—this may have plateaued for the time being.

n

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BST”,”blockLastUpdated”:1661236928000,”blockLastUpdatedDisplay”:”07.42 BST”,”blockFirstPublished”:1661236928000,”blockFirstPublishedDisplay”:”07.42 BST”,”blockFirstPublishedDisplayNoTimezone”:”07.42″,”title”:”Why European natural gas prices hit new record high”,”contributors”:[],”primaryDateLine”:”Tue 23 Aug 2022 07.53 BST”,”secondaryDateLine”:”First published on Tue 23 Aug 2022 07.36 BST”},{“id”:”630462808f087a97c2720c41″,”elements”:[{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.

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The euro has sunk to a fresh two-decade low as surging gas prices fuel concerns over the eurozone economy.

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“,”elementId”:”62b428a0-db9e-47ff-bee0-17d639322fa5″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Last night, the benchmark European gas price settled at its highest closing price on record, having surged during August on fears that Moscow is squeezing energy supplies.

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CHART OF THE DAY: European benchmark natural gas (Dutch TTF) closes the day at €276.75 per MWh, a record high settlement price

(There were higher **intraday** prices in early March, but TTF never closed the day with a **settlement** as high as today) pic.twitter.com/26nFVhUEzH

— Javier Blas (@JavierBlas) August 22, 2022

Europe’s benchmark electricity price jumped more than 25% on Monday to pass €700 per megawatt-hour for the first time, around 14 times the seasonal average over the past five years.

“,”elementId”:”6c78568b-f412-4ada-bd95-3a5e9e74236d”},{“_type”:”model.dotcomrendering.pageElements.TweetBlockElement”,”html”:”

OOPS! German benchmark electricity price jumped >25% on Monday to pass €700 per megawatt-hour for the first time. The level is about 14 times the seasonal average over the past five years. pic.twitter.com/gMQZkk7ncB

— Holger Zschaepitz (@Schuldensuehner) August 22, 2022

Jim Reid of Deutsche Bank told clients that the energy crisis had intensified.

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n

Starting in Europe, the energy crisis intensified yet further, after news over the weekend that Nord Stream would be shut for maintenance at the end of the month introduced fresh fears it would not re-open.

n

European natural gas prices ratcheted +14.59% higher to €280/MWH, a record high. German power prices surged +18.60% to another record as well, closing at €663 and breaching €700/MWH intraday for the first time ever.

n

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“,”elementId”:”4e9170aa-8ade-4fbf-bed7-a42da13e6d2a”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

Tapas Strickland, a director of economics at National Australia Bank, says:

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n

“Europe’s dire energy situation suggests the peak of inflation is not here yet and the risk remains that high inflation is sticky for longer without further aggressive central bank action.

n

“No surprise then to see the dollar at near multi-decade highs against a falling euro and British pound.”

n

“,”elementId”:”4891f4b1-540b-4350-80f9-d8875be5f19b”},{“_type”:”model.dotcomrendering.pageElements.TweetBlockElement”,”html”:”

this is looking exponential now: pic.twitter.com/5eGpdCC6Ac

— BionicBanker (@BrokenBanker) August 22, 2022

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Wall Street saw its worst day since June last night, with the Dow Jones Industrial Average dropping 2% as the summer rally fizzled out.

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Also coming up today

“,”elementId”:”a398e52a-1f70-45cf-a01c-0d0a234efd15″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

The latest surveys of purchasing managers across Europe will show the damage caused by soaring energy prices and extreme weather this summer, including low water levels on the Rhine.

“,”elementId”:”70acde5f-68c3-4bc5-8d8d-c3a229145686″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

August’s flash purchasing managers surveys are expected to show that eurozone factories shrank again this month, while the services sector struggled.

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Michael Hewson of CMC Markets has the details:

“,”elementId”:”a955e569-c9ff-410c-b621-dea0e7adbe01″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

Surging energy prices, along with sharply declining water levels on the Rhine have cut the rug out from the manufacturing sector in Germany with today’s August flash PMI expected to see a further decline from 49.3 to 48, while services activity is also expected to slip further from 49.7 to 49.

n

In France the picture isn’t any better, although the services sector is benefitting from a bit of a tourism boost, however the forest fires could well pull economic activity here down quite a lot more. In manufacturing economic activity is likely to slip to 49, from 49.5, while services could slip from 53.2 by a lot more than the 53 that is currently being forecast.

n

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In the UK, the picture is slightly better, but the PMI survey could show a slowdown in growth.

“,”elementId”:”1ff62edb-6a1e-42b2-ab10-a7be2b7773a6″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

With August being a slow period due to holidays, we could well start to see economic activity on the PMI level start to slide into contraction territory, from 52.1 for manufacturing in July and from 52.6 for services in July.

n

“,”elementId”:”2297a5ea-5599-48ca-9fc1-70e79ad9c904″},{“_type”:”model.dotcomrendering.pageElements.SubheadingBlockElement”,”html”:”

The agenda

“,”elementId”:”dce3ae1d-c6b2-4624-81da-13431ddc527d”},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

9am BST: Eurozone flash manufacturing and services PMI survey for August

9.30am BST: UK flash manufacturing and services PMI survey for August

11am BST: CBI survey of industrial trends

2.45pm BST: US flash manufacturing and services PMI survey for August

3pm BST: Eurozone consumer confidence survey for August

3pm BST: US new home sales for July

“,”elementId”:”ffa84376-0c3d-4c0c-ab04-5e8882a50bbb”}],”attributes”:{“pinned”:true,”keyEvent”:true,”summary”:false},”blockCreatedOn”:1661236612000,”blockCreatedOnDisplay”:”07.36 BST”,”blockLastUpdated”:1661237585000,”blockLastUpdatedDisplay”:”07.53 BST”,”blockFirstPublished”:1661236612000,”blockFirstPublishedDisplay”:”07.36 BST”,”blockFirstPublishedDisplayNoTimezone”:”07.36″,”title”:”Introduction: euro at two-decade low”,”contributors”:[],”primaryDateLine”:”Tue 23 Aug 2022 07.53 BST”,”secondaryDateLine”:”First published on Tue 23 Aug 2022 07.36 BST”}],”filterKeyEvents”:false,”format”:{“display”:0,”theme”:0,”design”:10},”id”:”key-events-carousel-mobile”}”>

Key events

Sterling is also under pressure against the US dollar this morning.

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The pound has dropped by almost half a cent to $1.172 against the dollar, the weakest since March 2020 (when the Covid-19 pandemic rocked global markets).

Britain’s surging energy costs and weakening economy have weighed on the pound, with families facing rocketing energy bills.

“,”elementId”:”9194449c-debf-438b-bea6-14f721f8aa58″},{“_type”:”model.dotcomrendering.pageElements.TextBlockElement”,”html”:”

As Jane Foley, head of FX strategy at Rabobank in London, explained yesterday:

“,”elementId”:”587796b8-885d-4342-bd95-1c0cec705672″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

“The weak UK growth outlook continues to weigh on the pound. News that Ofgem is set to announce on Friday that UK average annual household energy bills are likely to rise to more than £3,500 pounds reinforces the headwinds facing consumers.”

n

European gas prices are being driven higher by concerns over supplies from Russia (Gazprom has cut flows through Nord Stream 1 pipeline this summer), and also rising demand.

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On the latter point, James Huckstepp, head of EMEA gas analytics at S&P Global Commodity Insights, explains:

“,”elementId”:”2b1c45bf-241a-4d0f-ac52-61650901d405″},{“_type”:”model.dotcomrendering.pageElements.BlockquoteBlockElement”,”html”:”

n

The recent hot, dry, and relatively still (non-windy) weather is as bullish as it gets for summer gas demand.

n

This translates to high air-conditioning load, low hydro-generation (along with other nuclear and coal fired generation issues that come along with low-river levels), and then relatively low wind generation.

n

Regarding price-driven demand destruction—although it is visible both in the data and anecdotally—this may have plateaued for the time being.

n

Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.

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The euro has sunk to a fresh two-decade low as surging gas prices fuel concerns over the eurozone economy.

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Last night, the benchmark European gas price settled at its highest closing price on record, having surged during August on fears that Moscow is squeezing energy supplies.

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CHART OF THE DAY: European benchmark natural gas (Dutch TTF) closes the day at €276.75 per MWh, a record high settlement price

(There were higher **intraday** prices in early March, but TTF never closed the day with a **settlement** as high as today) pic.twitter.com/26nFVhUEzH

— Javier Blas (@JavierBlas) August 22, 2022

Europe’s benchmark electricity price jumped more than 25% on Monday to pass €700 per megawatt-hour for the first time, around 14 times the seasonal average over the past five years.

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OOPS! German benchmark electricity price jumped >25% on Monday to pass €700 per megawatt-hour for the first time. The level is about 14 times the seasonal average over the past five years. pic.twitter.com/gMQZkk7ncB

— Holger Zschaepitz (@Schuldensuehner) August 22, 2022

Jim Reid of Deutsche Bank told clients that the energy crisis had intensified.

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Starting in Europe, the energy crisis intensified yet further, after news over the weekend that Nord Stream would be shut for maintenance at the end of the month introduced fresh fears it would not re-open.

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European natural gas prices ratcheted +14.59% higher to €280/MWH, a record high. German power prices surged +18.60% to another record as well, closing at €663 and breaching €700/MWH intraday for the first time ever.

n

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Tapas Strickland, a director of economics at National Australia Bank, says:

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“Europe’s dire energy situation suggests the peak of inflation is not here yet and the risk remains that high inflation is sticky for longer without further aggressive central bank action.

n

“No surprise then to see the dollar at near multi-decade highs against a falling euro and British pound.”

n

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this is looking exponential now: pic.twitter.com/5eGpdCC6Ac

— BionicBanker (@BrokenBanker) August 22, 2022

Wall Street saw its worst day since June last night, with the Dow Jones Industrial Average dropping 2% as the summer rally fizzled out.

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Also coming up today

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The latest surveys of purchasing managers across Europe will show the damage caused by soaring energy prices and extreme weather this summer, including low water levels on the Rhine.

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August’s flash purchasing managers surveys are expected to show that eurozone factories shrank again this month, while the services sector struggled.

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Michael Hewson of CMC Markets has the details:

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Surging energy prices, along with sharply declining water levels on the Rhine have cut the rug out from the manufacturing sector in Germany with today’s August flash PMI expected to see a further decline from 49.3 to 48, while services activity is also expected to slip further from 49.7 to 49.

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In France the picture isn’t any better, although the services sector is benefitting from a bit of a tourism boost, however the forest fires could well pull economic activity here down quite a lot more. In manufacturing economic activity is likely to slip to 49, from 49.5, while services could slip from 53.2 by a lot more than the 53 that is currently being forecast.

n

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In the UK, the picture is slightly better, but the PMI survey could show a slowdown in growth.

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With August being a slow period due to holidays, we could well start to see economic activity on the PMI level start to slide into contraction territory, from 52.1 for manufacturing in July and from 52.6 for services in July.

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The agenda

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9am BST: Eurozone flash manufacturing and services PMI survey for August

9.30am BST: UK flash manufacturing and services PMI survey for August

11am BST: CBI survey of industrial trends

2.45pm BST: US flash manufacturing and services PMI survey for August

3pm BST: Eurozone consumer confidence survey for August

3pm BST: US new home sales for July

Filters BETA

Pound hits lowest since March 2020

Sterling is also under pressure against the US dollar this morning.

The pound has dropped by almost half a cent to $1.172 against the dollar, the weakest since March 2020 (when the Covid-19 pandemic rocked global markets).

The pound vs the US dollar Photograph: Refinitiv

Britain’s surging energy costs and weakening economy have weighed on the pound, with families facing rocketing energy bills.

As Jane Foley, head of FX strategy at Rabobank in London, explained yesterday:

“The weak UK growth outlook continues to weigh on the pound. News that Ofgem is set to announce on Friday that UK average annual household energy bills are likely to rise to more than £3,500 pounds reinforces the headwinds facing consumers.”

Why European natural gas prices hit new record high

European gas prices are being driven higher by concerns over supplies from Russia (Gazprom has cut flows through Nord Stream 1 pipeline this summer), and also rising demand.

On the latter point, James Huckstepp, head of EMEA gas analytics at S&P Global Commodity Insights, explains:

The recent hot, dry, and relatively still (non-windy) weather is as bullish as it gets for summer gas demand.

This translates to high air-conditioning load, low hydro-generation (along with other nuclear and coal fired generation issues that come along with low-river levels), and then relatively low wind generation.

Regarding price-driven demand destruction—although it is visible both in the data and anecdotally—this may have plateaued for the time being.

European gas prices Photograph: Platts of S&P Global Commodity Insights

Introduction: euro at two-decade low

Good morning, and welcome to our rolling coverage of business, the world economy and the financial markets.

The euro has sunk to a fresh two-decade low as surging gas prices fuel concerns over the eurozone economy.

The euro vs the US dollar over the last 20 years Photograph: Refinitiv

Last night, the benchmark European gas price settled at its highest closing price on record, having surged during August on fears that Moscow is squeezing energy supplies.

CHART OF THE DAY: European benchmark natural gas (Dutch TTF) closes the day at €276.75 per MWh, a record high settlement price

(There were higher **intraday** prices in early March, but TTF never closed the day with a **settlement** as high as today) pic.twitter.com/26nFVhUEzH

— Javier Blas (@JavierBlas) August 22, 2022

CHART OF THE DAY: European benchmark natural gas (Dutch TTF) closes the day at €276.75 per MWh, a record high settlement price

(There were higher **intraday** prices in early March, but TTF never closed the day with a **settlement** as high as today) pic.twitter.com/26nFVhUEzH

— Javier Blas (@JavierBlas) August 22, 2022

Europe’s benchmark electricity price jumped more than 25% on Monday to pass €700 per megawatt-hour for the first time, around 14 times the seasonal average over the past five years.

— Holger Zschaepitz (@Schuldensuehner) August 22, 2022

OOPS! German benchmark electricity price jumped >25% on Monday to pass €700 per megawatt-hour for the first time. The level is about 14 times the seasonal average over the past five years. pic.twitter.com/gMQZkk7ncB

— Holger Zschaepitz (@Schuldensuehner) August 22, 2022

Jim Reid of Deutsche Bank told clients that the energy crisis had intensified.

Starting in Europe, the energy crisis intensified yet further, after news over the weekend that Nord Stream would be shut for maintenance at the end of the month introduced fresh fears it would not re-open.

European natural gas prices ratcheted +14.59% higher to €280/MWH, a record high. German power prices surged +18.60% to another record as well, closing at €663 and breaching €700/MWH intraday for the first time ever.

Tapas Strickland, a director of economics at National Australia Bank, says:

“Europe’s dire energy situation suggests the peak of inflation is not here yet and the risk remains that high inflation is sticky for longer without further aggressive central bank action.

“No surprise then to see the dollar at near multi-decade highs against a falling euro and British pound.”

this is looking exponential now: pic.twitter.com/5eGpdCC6Ac

— BionicBanker (@BrokenBanker) August 22, 2022

Wall Street saw its worst day since June last night, with the Dow Jones Industrial Average dropping 2% as the summer rally fizzled out.

Also coming up today

The latest surveys of purchasing managers across Europe will show the damage caused by soaring energy prices and extreme weather this summer, including low water levels on the Rhine.

August’s flash purchasing managers surveys are expected to show that eurozone factories shrank again this month, while the services sector struggled.

Michael Hewson of CMC Markets has the details:

Surging energy prices, along with sharply declining water levels on the Rhine have cut the rug out from the manufacturing sector in Germany with today’s August flash PMI expected to see a further decline from 49.3 to 48, while services activity is also expected to slip further from 49.7 to 49.

In France the picture isn’t any better, although the services sector is benefitting from a bit of a tourism boost, however the forest fires could well pull economic activity here down quite a lot more. In manufacturing economic activity is likely to slip to 49, from 49.5, while services could slip from 53.2 by a lot more than the 53 that is currently being forecast.

In the UK, the picture is slightly better, but the PMI survey could show a slowdown in growth.

With August being a slow period due to holidays, we could well start to see economic activity on the PMI level start to slide into contraction territory, from 52.1 for manufacturing in July and from 52.6 for services in July.

The agenda

9am BST: Eurozone flash manufacturing and services PMI survey for August
9.30am BST: UK flash manufacturing and services PMI survey for August
11am BST: CBI survey of industrial trends
2.45pm BST: US flash manufacturing and services PMI survey for August
3pm BST: Eurozone consumer confidence survey for August
3pm BST: US new home sales for July

www.theguardian.com

George Lanington

George is Digismak’s reported cum editor with 13 years of experience in Journalism

Euro hits lowest level in two decades as energy crisis intensifies – business live | Business

Introduction: euro at two-decade low

Also coming up today

The agenda

Also coming up today

The agenda

Also coming up today

The agenda

Pound hits lowest since March 2020

Why European natural gas prices hit new record high

Introduction: euro at two-decade low

Also coming up today

The agenda

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