Ft, bets against the euro at new highs from March 2020

BRUSSELS -

and fears that it will lead to a recession: net short positions on the euro, reports the Financial Times, have reached their highest levels since the beginning of the pandemic in March 2020.

According to data released on Friday by the Commodity Futures Trading Commission, the FT notes, in the week to August 23,

for 44,100 contracts, from 42,800 the week before. .

In the first week of March 2020 there were 86,700 contracts.

Over the past year, the euro has already fallen by 15%, ending up below par with the dollar, recalls the Financial Times.

It hit a 20-year low last week as wholesale gas and electricity prices rose to all-time highs in Europe on fears that Russia will cut back on crucial energy supplies.

"The euro right now is purely a function of the European energy shock," Mark McCormick, global head of FX strategy at TD Securities

"The most important factor for the next two weeks is what happens with Nord Stream 1 and the increase in gas prices."

Rising natural gas prices have prompted investors to reevaluate how long inflation could stay high

and how hard it could hit the eurozone economy as sectors from fertilizer to glass manufacturing warn that prices high gas levels are limiting production, the newspaper also notes.

According to David Adams, head of Morgan Stanley's G10 FX strategy,

and the fact that the US is not as exposed to the gas crisis also goes against the euro.

The weak euro is also fueling inflation, driving up the price of imports including energy.

But according to Adams in the next 6-12 months with an ECB rate hike, eurozone bonds could become more attractive with a risk for those who bet against the euro.