The euro lost value on Thursday. The common currency fell 0.6 percent to $0.9944 after rising to $1.0029 earlier. The reason for the losses was, among other things, pessimistic statements by the President of the European Central Bank (ECB), Christine Lagarde, about the economic prospects in Europe. The ECB’s decision to raise key interest rates by 0.75 percentage points was expected. “The ECB is emphasizing that fighting inflation has top priority,” said portfolio manager Thomas Altmann from investment advisor QC Partners. “A weakening of the economy would be collateral damage that the ECB would accept if necessary.”
US Federal Reserve Chairman Jerome Powell also stressed the Fed’s determination to get inflation under control. This gave additional support to the dollar. Rate hikes will continue until that target is met. He warned against hasty monetary easing, Powell said. Meanwhile, Lagarde’s statement also led to selling in the European bond market. That drove the yield on 10-year federal bonds to a two-and-a-half-month high of 1.705 percent.
Gas prices fell to their lowest level in about a month ahead of the EU energy ministers’ meeting this Friday. At their meeting, the heads of department want to discuss solutions to the extremely high energy prices. A price cap for Russian gas imports is also up for debate. The price of the TTF futures contract for Dutch natural gas fell by almost ten percent. At EUR 193 per megawatt hour, the price fell below the EUR 200 mark for the first time since the beginning of August. Only at the beginning of the week did the gas price skyrocket towards 300 euros due to the temporary delivery stop via the important Nord Stream 1 pipeline.