The U.S. dollar continued to power ahead yesterday against the Euro after last week’s strong non-farm payrolls report, as well as talk amongst European union members of additional sanctions on Russia for its invasion of Ukraine.
The strong jobs report has now ramped up heightened interest rate expectations from the US Federal reserve and Fed funds futures have already priced in a very strong chance of a 50-basis point hike next month and bond yields are also benefiting from the news with 2-year Treasury yields climbing to around 2.5%.
In a sign that Eurozone members are becoming more united in their stance against Russia, German Defense Minister Christine Lambrecht said the European Union should begin discussions about ending Russian gas imports, which has been a topic so far that was off limits in Germany as Russia supplies some 40% of gas to the country.
Such a move would have severe economic ramifications on the Eurozone and put pressure on the European currency as the bloc scrambles to find other sources for supply gas.
Looking ahead today, there is a raft of economic news to drive the EUR/USD currency pair from both sides of the Atlantic starting with the release of S&P Global Composite PMI figures from France, Germany, Spain and the Eurozone as a whole which should paint a current picture of business conditions throughout the Euro block.
In the American trading session market participants will await the release of the same news from the US as well as ISM services numbers which should also show the current state of business conditions in the world’s largest economy.
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