EUR/USD slipped below the 0.9900 mark for the first time since December 2002 on Monday, as Russia’s gas supply halt through its major pipeline to Germany added to Europe’s challenges to secure fuel for the winter, stoking energy price concerns.
Russia scrapped a Saturday deadline to resume gas flows via Nord Stream 1, as Gazprom said it needed to fix an oil leak discovered in a vital turbine.
Nord Stream 1 was expected to resume operations at 01:00 GMT on Saturday following a three-day halt for maintenance. However, Gazprom did not provide a new time frame.
“Such leaks do not normally affect the operation of a turbine and can be sealed on site. It is a routine procedure within the scope of maintenance work,” Siemens Energy, which usually services Nord Stream 1 turbines, said in a statement.
According to policy makers in Brussels, Russia is using gas as an economic weapon of retaliation for the imposed sanctions by the West.
“This is part of Russia’s psychological war against us,” Michael Roth, chair of the German parliamentary foreign affairs committee, said in a tweet.
On the monetary policy front, markets are now pricing an almost 80% chance of a 75 basis point rate hike by the European Central Bank.
“One would have anticipated that a hawkish ECB should deliver some kind of a tailwind to the euro. But instead what you might get is the policy tradeoff and dilemma biting in,” Vishnu Varathan, head of economics and strategy at Mizuho Bank in Singapore, was quoted as saying by Reuters.
Meanwhile, fed funds futures suggest a 58% chance of a 75 basis point rate increase by the Federal Reserve this month, after last week’s US employment data revealed a few hints of a loosening labor market.
Employers in all sectors of the economy, excluding the farming industry, hired more workers than anticipated last month. Still, a moderate wage growth and a rate of unemployment rising to 3.7% implied there might be less pressure on the Fed to deliver another super-sized hike in September.
As of 9:10 GMT on Monday EUR/USD was edging down 0.37% to trade at 0.9915. During late Asian trading session, the major Forex pair slipped as low as 0.9877, which has been its weakest level since December 2nd 2002 (0.9859).
Daily Pivot Levels (traditional method of calculation)
Central Pivot – 0.9976
R1 – 1.0010
R2 – 1.0067
R3 – 1.0101
R4 – 1.0135
S1 – 0.9918
S2 – 0.9884
S3 – 0.9827
S4 – 0.9769