The euro struck its lowest level in 16 months this week as traders bet that the European Central Bank will stick to its accommodative policies even though widespread inflation is prompting US and UK policymakers to raise interest rates.
Traders are dialling up their wagers that the Federal Reserve and the Bank of England will lift rates from historic lows over the past year. The result has been a sharp decline in the euro against the dollar, ending a period in which currencies had largely shrugged off the bond market turmoil.
The euro sank below $1.13 yesterday, its weakest level since July last year and a swift decline from nearly $1.16 in the middle of last week.
Although part of this weakness is the flipside of a broad rally for the dollar, the euro has lost ground against peers benefiting from the prospect of higher interest rates. Against the pound, it has reversed a rally in early November and fell to its weakest level since the early stages of Covid-19.
Thank you for reading FirstFT Europe/Africa. Here’s the rest of today’s news — Jennifer
Five more stories in the news
1. Joe Biden demands oil sector probe The US president has called on the Federal Trade Commission to investigate whether the country’s biggest oil companies including ExxonMobil and Chevron are engaged in “potentially illegal conduct” that is resulting in higher gasoline prices for Americans.
2. UN: Shipping costs to push up global inflation The United Nations Conference on Trade and Development has warned that the elevated costs resulting from a global supply chain crunch will further fuel inflation and disproportionately hit developing nations’ economies.
3. EU lawmakers agree on Big Tech rules The European parliament’s main political parties have reached a deal on how to target tech companies, including Apple and Google, as part of an effort to curb anti-competitive practices in the digital economy.
4. ‘Iran behind ransomware campaign’ Authorities in both the US and UK have said Iran is conducting an “ongoing” campaign of ransomware and other cyber attacks on US critical infrastructure and Australian organisations that began in March.
5. State-backed VC group takes stakes in UK start-ups British Patient Capital, an arm of the British Business Bank, has acquired its first direct stakes in a range of start-ups, adding to a growing portfolio of government investments to support companies during and after Covid-19.
European countries including Ireland, Slovakia and the Czech Republic are set to reintroduce Covid-19 restrictions this week, in an effort to curb a fourth wave.
UK inflation reached its highest level in almost a decade in October and the number of people employed rose in the month after the government’s furlough scheme closed, piling pressure on the Bank of England to raise interest rates.
Japan is preparing direct stimulus cheques of ¥100,000 ($872) to households with people younger than 18 as part of a huge economic package.
The day ahead
UK PM unveils Integrated Rail Plan Boris Johnson will today unveil £96bn of investment in rail links to boost northern England, but the watered down plans risk inciting the wrath of MPs in the region.
Turkish central bank interest rate decision Analysts expect the bank to cut rates for the third month in a row. It is likely to slash its benchmark rate by 1 percentage point to 15 per cent, according to a Bloomberg survey, threatening to heap pressure on the lira and accelerating inflation.
Paytm debut on Indian bourses The payments company is expected to make its stock market debut as the country’s largest-ever IPO after it priced its shares at the top of the range last week.
Earnings reports DMGT, the owner of the Daily Mail, is due to release results, after saying this month that it was eyeing possible job cuts because of rising inflationary pressures. See a full list of company reports here.
What else we’re reading
Boris Johnson’s Christmas truce The UK prime minister wants a quiet holiday this year. Economic and political difficulties at home have led his government to pull back from a trade confrontation with Brussels over the so-called Northern Ireland protocol. But does this mark a shift in approach?
Why some fear the next pandemic could be lab-made Scientists have said that splicing deadly viruses to make them more transmissible can help to create vaccines and identify future threats. But US government funding for such research is under scrutiny over safety concerns.
‘Deep distrust’ clouds Xi-Biden nuclear agreement Experts react to the announcement of the US-China talks. “Holding talks is a necessary first step, but the real question is whether the parties have anything substantive to say to one another,” one said. Do you think the US-China nuclear talks will be successful? Tell us in our latest poll.
Open-source investigators seek justice in Myanmar Since the military coup, social media has filled up with images of people who have been beaten or fatally shot. In response, online outlets are using pioneering digital forensics to assemble criminal evidence, laying the groundwork for future crimes-against-humanity trials.
Russian missile test raises fears over debris cloud First came the unexplained space objects over New Zealand. Then came the debris over Costa Rica and Texas. An anti-satellite missile test by Moscow has threatened to affect hundreds of commercial satellites, including from SpaceX. Here’s why it’s a problem.
Opinion: There will be no prosperous global space economy if the environment is quickly trashed, writes Peggy Hollinger.
Meet the journalist
Isabel Berwick is the FT’s Work & Careers editor and the host of Working It, the podcast about doing work differently. This week’s episode is about what we can learn from companies that embrace remote working. Listen to a new episode every Wednesday. Subscribe here.
What themes and stories are you most looking forward to discussing on Working It?
I am really excited to be talking to the people who are trying new, radical things — whether that’s working a four-day week, abolishing most managers or going public with all the salaries in their company. Some of the ideas we cover are “out there”, but all of them are really thought-provoking and help us make sense of the new workplace.
What else are you listening to right now?
My longest pod-lationship is with the Slate Culture Gabfest — I’ve been listening for probably 10 or 12 years now. It’s got a blend of regular presenters who feel like friends, interesting guests and ahead-of-the-curve topics for discussion. My new Saturday morning listen, alongside my long standing relationship with Payne’s Politics, a UK politics show hosted by my FT colleague Sebastian Payne, is the FT Weekend podcast. It’s got a perfect, leisurely mix of guests and topics — and it’s already introduced me to new books, ideas and places.
What’s your experience been like returning to the office after the pandemic?
I never really left the office. I live in central London so it’s an easy commute. I have been coming in for a couple of days every week except during the months when we were locked down in our homes. My new workplace concern is perhaps a niche one: I’ve got so used to being in a quiet office that it’s going to be really hard to adjust to the noise level and distraction once it’s full again.