EUR/USD: A glance at thermometer might be a good indicator for the development of the euro – Commerzbank

EUR/USD is trading back above the 0.98 mark. What does the thermometer have to do with the euro? Economists at Commerzbank believe that this is going to be a good indicator of the direction of the shared currency.

Risk of gas rationing and a strong recession have diminished

“Due to the mild autumn weather in Europe, the full gas stores and the prospect of additional nuclear energy there is reason to assume that the risk of gas rationing and thus a pronounced collapse of the economy over the winter months might have become smaller. That in turn might suggest that the ECB could implement its tight rate cycle to fight inflation as signalled, which would be positive for the euro.”

“Officially winter does not start until 21st December. There is still plenty of time for Europe to be in the grips of cold weather, causing the levels of the gas stores to drop rapidly. Let us hope that we don’t get to that stage, but the weather over the coming six months remains the big unknown in connection with the ECB’s monetary policy decisions and thus the euro. So that a glance at the thermometer might be a good indicator for the development of the euro over the coming months – to put it simply.”