Euro on track for best week in 16 years
After a seismic week for the future of Europe, the euro is on track for its best week since the financial crisis 16 years ago.
The euro has climbed by 4.6% so far this week against the US dollar, from $1.0375 a week ago to $1.086 today.
That would be its biggest gain, in percentage terms, since the week to 20 March 2009, when the financial markets were being rattled by the recession following the global financial crisis.
In value terms, it’s on track to be the sixth best week in at least the last 20 years.
This week has seen the sixth biggest weekly upmove in EURUSD since the Euro’s inception in 1999!
– The top four were all during the financial crisis – with the biggest upmove on record being the +692 points rise on the week ending 20th March 2009
– Outside the Financial crisis –…— Philippe Loustaunau (@philoust) March 7, 2025
This week, the euro has benefitted from the slide in the value of the US dollar as Donald Trumps’s threatened trade wars hurt the US currency.
But the euro has also gained against sterling, up to 83.95p, from 82.46p a week ago.
“The euro continues to benefit from the apparent change in the eurozone’s fiscal stance,” says Achilleas Georgolopoulos, senior market analyst at Trading Point.
There was a fiscal sea change in Germany this week, where major parties are pushing plans to reform the country’s debt brake, to allow for higher defense spending.
Last night, European leaders agreed to a massive increase to defence spending, to bolster Europe’s defence industry and increase its military capability.
Key events
BofA Global Research has raised its forecast for the euro to reach $1.15 by the end of 2025.
In a note published today, BofA argue that German’s new fiscal package is “a watershed moment” for the currency, Reuters reports.
Euro on track for best week in 16 years
After a seismic week for the future of Europe, the euro is on track for its best week since the financial crisis 16 years ago.
The euro has climbed by 4.6% so far this week against the US dollar, from $1.0375 a week ago to $1.086 today.
That would be its biggest gain, in percentage terms, since the week to 20 March 2009, when the financial markets were being rattled by the recession following the global financial crisis.
In value terms, it’s on track to be the sixth best week in at least the last 20 years.
This week has seen the sixth biggest weekly upmove in EURUSD since the Euro’s inception in 1999!
– The top four were all during the financial crisis – with the biggest upmove on record being the +692 points rise on the week ending 20th March 2009
– Outside the Financial crisis –…— Philippe Loustaunau (@philoust) March 7, 2025
This week, the euro has benefitted from the slide in the value of the US dollar as Donald Trumps’s threatened trade wars hurt the US currency.
But the euro has also gained against sterling, up to 83.95p, from 82.46p a week ago.
“The euro continues to benefit from the apparent change in the eurozone’s fiscal stance,” says Achilleas Georgolopoulos, senior market analyst at Trading Point.
There was a fiscal sea change in Germany this week, where major parties are pushing plans to reform the country’s debt brake, to allow for higher defense spending.
Last night, European leaders agreed to a massive increase to defence spending, to bolster Europe’s defence industry and increase its military capability.
All Eurostar Paris trains cancelled on Friday amid French rail disruption over suspected WW2 bomb – Europe live
There’s significant disruption to Eurostar services today, after an suspected unexploded bomb from the second world war was found on railway tracks in the commune of Saint Denis.
Eurostar has just confirmed to the Guardian that “all Eurostar trains are cancelled to and from Paris today.”
That includes all services on lines: London-Paris, Paris-London, Brussels-Paris and Paris-Brussels.
Our Europe live blog has all the action:
Oil on track for biggest monthly drop since October
This has also been a rough week for the oil price.
Brent crude, the international benchmark, has dropped by 4% so far this week to just over $70 per barrel.
That would be its biggest weekly drop since last October.
Oil has been hit by concerns that a trade war would hurt economic growth, dampening global demand for energy. The Opec+ group’s plan to raise production also weighs on crude prices.
Oil is struggling with “a mix of tariffs, US growth concerns, the potential lifting of US sanctions on Russia, and OPEC+ opting to increase output,” reports Tony Sycamore, analyst at IG.
There is “a sense of chaos” in the markets today, reports Neil Wilson, analyst at TipRanks.com, after yesterday’s Wall Street wobble:
Trump paused tariffs and the market sold off. The old adage that the market hates uncertainty rings true. How the heck are you supposed to make investments or plan?
The Nasdaq ended the session down 2.6%, while the S&P 500 finished 1.78% lower. Both are headed for weekly losses of around the 4% mark.
The Mag 7 stocks are down 15% from recent highs. European stock markets were lower Friday after the DAX hit a record high on Germany’s bumper spending plans and the ECB cut rates. The dollar continues to feel pressure while China’s imports tumbled amid trade war concerns.
FTSE 100 on track for worst week of 2025
Unless we get a turnaround rally today, the FTSE 100 share index will post its biggest weekly loss of the year so far.
Since Monday morning, the “Footsie” has dropped by 1.8% – its biggest weekly drop since 16-20 December last year.
Richard Hunter, head of markets at interactive investor, says:
“Well-worn though the phrase may be, markets hate uncertainty – and investors are getting it in spades.
The constant changes of tack emanating from the White House on tariffs are beginning to test investors’ patience, not least because the differing messages have different implications for highly interconnected global markets. In addition, the US has seen a recent run of weakening economic data, quite apart from any inflationary and recessionary fears that investors are harbouring following President Trump’s aggressive tariff actions so far.
Shares have opened lower in London, at the start of the final trading day of the week.
After losses on Wall Street last night, the UK’s FTSE 100 share index is down 27 points, or 0.3% at 8655.
European markets are also lower, with the Stoxx 600 index dropping 0.4%.
The US dollar is weakening again today, down 0.25% against a basket of currencies.
The pound is up 0.2 cents to $1.2904, towards the four-month high touched yesterday.
The euro has gained half a cent, to $1.0831, which is also the strongest since last November.
UK house price dip 0.1%
In the UK, house prices edged down last month, lender Halifax reports.
The average UK house price dipped by 0.1% in February, lowering the average property price down to £298,602, down from £298,815 in January.
Annual house price inflation remained unchanged at 2.9%, while in Scotland they rose by 3.8% – the fastest pace in 13 months.
Amanda Bryden, head of mortgages at Halifax, says:
“February’s figures highlight the delicate balance within the UK housing market. While there’s been talk of a last minute rush on new mortgages ahead of the changes to stamp duty, inevitably we’ve seen some of the demand that was brought forward start to fade as the April deadline ticks closer, given the time needed to complete a purchase.
That may help to explain why growth in first-time buyer property prices eased in February, falling to +2.4%, in contrast to homemover price inflation which accelerated, reaching +3.7%.
House price growth remains hesitant as UK prices took a -0.1% step back in February, making the average property price now £298,602 according to lender @HalifaxBank
Annual growth however remained steady at +2.9%, but Scotland saw house prices rise at the fastest pace in 13… pic.twitter.com/rmFfZSNOl9— Emma Fildes (@emmafildes) March 7, 2025
German factory orders tumble
Factory orders in Germany have slumped, showing the challenge facing chancellor-in-waiting Friedrich Merz.
German industrial orders fell by 7.0% month-on-month in January, the federal statistics office reported this morning. Excluding large orders, incoming orders were 2.7% lower than in the previous month.
On an annual basis, orders were 2.6% lower than a year ago.
Chinese foreign minister Wang Yi has accused Washington of “meeting good with evil”, as anger over Donald Trump’s tariffs continues to bubble up.
Wang told a press conference today, on the sidelines of the country’s annual parliamentary session, that China will continue to retaliate to the United States’ “arbitrary tariffs”.
Associated Press reports:
Wang said China’s efforts to help the U.S. contain its fentanyl crisis have been met with punitive tariffs, which are straining their ties.
“No country should fantasize that it can suppress China and maintain a good relationship with China at the same time,” Wang said. “Such two-faced acts are not good for the stability of bilateral relations or for building mutual trust.”
China’s imports tumble as demand falls and trade war heats up
China imports have fallen sharply at the start of this year, as the prospect of a trade war with the US hits its economy.
Imports fell 8.4% year-on-year in January and February, new customs data shows, weaker than the 1% growth expected by economists.
That suggests that China’s manufacturing base could be cutting back on buying raw materials and parts, concerned that demand for their wares would fall due to new tariffs at the US border.
Lynn Song, chief economist for Greater China at ING, says:
China’s economy got off to a weak start in 2025 as exports grew just 2.3% in the first two months of the year. A sharp slump in imports, meanwhile, resulted in a bigger-than-expected trade surplus.
Looking into the detail of the import data, Song explains:
We still saw strong imports in tech-related imports, with a 54.4% YoY ytd surge in automatic data processing equipment imports. And an overall 6.4% YoY ytd growth in hi-tech product imports. However, most other categories came in weak.
Commodities imports generally contracted over the first two months of the year, with crude oil (-10.5%), natural gas (-13.8%), and steel (-7.9%) all still soft. We’re already seeing a slump in soybean imports, which fell by -14.8% YoY ytd. This was even before the impacts of China’s retaliatory tariffs on US agricultural products.
China’s exports rose, though, in the first two months of 2025 – up 2.3%.
Exports to the US rose to almost $76bn, Bloomberg reports, the highest total for January and February since 2022 when the Covid-19 pandemic was upending global trade.
US data yesterday showed that America’s trade deficit swelled to a record high in January, as firms tried to front-run tariffs by importing more goods.
Introduction: Trade war fears drive up volatility
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The markets continue to be buffeted by fears of a global trade war, as Donald Trump vacillates over the imposition of tariffs on major US trading partners.
Last night in New York, the S&P 500 index fell 1.8% to its lowest level since early November – the post-election Trump bump has well-and-truly vanished. Tech stock slid, pushing the Nasdaq index into a correction (more than 10% below its record high).
Wall Street’s fear index, the CBOE Volatility index, closed at its highest level since 18 December, showing investors are jittery.
They may also be flummoxed, after Trump temporarily delayed tariffs on many goods from Canada and Mexico yesterday.
Despite that u-turn, “the great unwind of US equity evolves and gathers momentum”, says Chris Weston, analyst at brokerage Pepperstone.
Weston explains:
Confusion reigns around the Trump Administration policy agenda, and while we’ve seen yet another pause on Canadian and Mexican tariffs until 2 April, the lack of consistency to hold policy firm further limits the visibility US businesses have to position margins and to make strategic planning decisions.
Trump detailed that he’s “not even looking at the stock market” … it’s easy to be sceptical on that call, but Trump needs to portray control when putting through the hard policies.
It’s never a great sign when politicians start blaming malignant forces when the financial markets give their policies the thumbs down. But that was Trump’s message yesterday; asked if his tariffs were scaring the markets, Trump replied:
“Well, a lot of them are globalist countries and companies that won’t be doing as well.
Because we’re taking back things that have been taken from us many years ago.”
European stock markets are expected to drop today, with the FTSE 100 index forecast to fall 0.55% or 48 points. Japan’s Nikkei has fallen over 2% today, to its lowest level since last September.
Investors are poised for the latest US jobs report. The consensus is that hiring picked up in February, lifting non-farm payrolls by around 160,000 last month.
But yesterday, Larry Kudlow – former Director of the US National Economic Council turned Fox News host – suggested the NFP report could be flat, or even negative….
Kudlow: “Some very smart people are telling me that the February jobs number coming out Friday could be flat, even negative. The GDP tracker from the Atlanta Fed is showing for the first quarter a -2.5 or -2.8%. And we’ve had lousy numbers on things like housing and business… pic.twitter.com/zKFN5h6wJv
— Jeffrey Jonah (@JeffreyJonah5) March 6, 2025
The agenda
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7am GMT: Halifax index of UK house prices in February
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10am GMT: Eurozone GDP Q4 2024 (3rd estimate)
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1.30pm GMT: US non-farm payroll for February
