The Euro has hit a new 2 decade low against the US dollar in today’s Asian trading session following on from last Friday’s heavy losses on the back of a strong US jobs report which ensures the US federal Reserve will continue to hike interest rates at an aggressive rate
Market participants now seem convinced that the US central bank will stick to its aggressive policy tightening path after the non-farm payrolls figure hit the market which showed the US economy added 312K jobs in August, which was above analysts’ expectations for a figure of 300K anticipated. The figure however, marked a notable slowdown from the previous month's figure of 526K.
The news has boosted the chances that the Fed will deliver another super-sized rate hike of 75 basis points which will take it from the current 2.5 percent to well over 3 percent, and leave the Euro languishing as investors snap up the Greenback as a high yielding currency.
The European economy has been dealt another blow after Russia's indefinite closure of its main gas supply pipeline threatens to worsen the already dire energy crisis in Europe which is probably the tipping point to push the Eurozone into a recession which is obviously going to put more pressure on the Euro.
The main drivers of the EUR/USD currency pair today will be the release of the S&P Global/BME Composite PMI from Germany and the Eurozone for the month of August which should paint a clear picture on the state of the business sector and create some volatility in the currency pair.
The market will also keep an eye on any further developments regarding gas supplies from Russia which Europe has called the economic war by accusing Russia of weaponizing energy supplies as the European continent heads into the winter season.