The nightmare in Europe keeps getting worse.
Natural gas prices are up another 9% today and forward electricity prices in Germany are 14x above the levels from a year ago. These are crippling numbers for heavy industry and the German DAX is down 2.3% today, which is the worst of any major global index.
The euro has treaded water for the past six weeks as the US dollar softened on a less-hawkish Fed but that trade now appears to be exhausted. Meanwhile, the outlook for Europe is rapidly deteriorating. The euro low in July was 0.9952 and we're about 20 pips away from that now. If it breaks, it will be at the lowest level since late-2002.
What struck me this weekend is that the public in Europe has yet to realize how bad it's going to be. There's a lag in energy prices that hasn't been felt yet and depends on different countries and contract structures but the pain is coming.
Topless protestors this weekend photobombed German Chancellor Olaf Scholz with a message that read 'gas embargo now'.
The time to buy the euro won't be until they're protesting the opposite.
