In a follow-up to prior news from the European session, Germany backs joint EU debt to tackle energy crisis – Bloomberg, whereby it was stated that Germany has reportedly agreed to back joint EU debt to tackle the energy crisis, in more recent trade, Reuters reporter that Germany has no plans to back a joint European Union debt issuance.
This came from a government source who told Reuters on Monday, denying a media report saying Chancellor Olaf Scholz supported joint debt issuances to tackle the energy crisis.
Market impact
During the general volatility of the Europena session, the original news may have been impactful, but in a quieter afternoon New York session, there has been no impact in this headline. However, investors are keeping a close watch on the deepening crisis in the European Union. Soaring gas and electricity prices threaten to shatter any semblance of policy cohesion in the 27-member bloc. Borrowing costs between member countries are beginning to diverge which is a negative for the euro as investors flood into the US dollar for a safe haven.
Tensions have flared after the German government last month unveiled a €200 billion ($306 billion) support package aimed at helping German households and the nation's businesses to cope with runaway inflationary energy bills. The Germans received a chorus of protest and a furious backlash from other EU countries, who accused Berlin of using its fiscal muscle to provide massive subsidies to benefit German producers.
Meanwhile, EUR/USD is down on the day by 0.24%, but up from its lows of 0.9681 that were made as the US dollar creeps back towards its 20-year highs.
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