Gas jump sends euro plunging upstream of Jackson Hole
Pressure mounted against the greenback on Monday. The EUR/USD plunged below parity for the first time since 2002 as soaring gas prices in Europe increasingly threatened the continent’s economies to plunge into recession. The price of gas in Europe jumped 13% on Monday after Gazprom announced that its gas deliveries to Europe through the Nord Stream 1 pipeline would be interrupted for three days for “maintenance” reasons.
The price of European gas is now up nearly 500% over one year, which will inevitably affect all economic players, in particular the most consuming industries, namely the industrial sector.
The pressure on the euro should continue to increase as gas prices reach new highs. At the same time, traders will be watching economic data like the PMIs released earlier this morning. They unsurprisingly painted a bleak picture for the European economy, as the composite index slipped into contractionary territory for the second month in a row, increasing the likelihood of a recession.
Attention will also be turned to the US PMIs published this afternoon, then the Jackson Hole symposium during which the Fed Chairman could harden his tone following the unexpected easing of financing conditions in recent weeks.
EUR/USD daily price chart – key levels