FT News Briefing Why the euro is on a losing streak
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Sep 12, 2023 Norway’s $1.4 trillion sovereign wealth fund is now the largest shareholder in UBS, making waves in the finance sector. Meanwhile, a significant antitrust trial against Google is about to begin, marking a pivotal moment for big tech. The euro faces a tough stretch, enduring an eight-week decline due to difficult economic indicators, particularly from Germany. Speculation surrounds the European Central Bank's response and potential interest rate changes as challenges mount in the region.
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Google Antitrust Case
- The Department of Justice is suing Google for anti-competitive practices, alleging it uses agreements to maintain search engine prominence.
- Google argues that consumers choose their search engine due to its quality and that other companies shape these agreements.
Euro's Decline
- The euro's value has dropped about 5% since mid-July due to consistently poor economic data from Europe, particularly Germany.
- This, combined with strong US data and China's economic struggles, has created a 'perfect storm' for the euro.
ECB's Dilemma
- The European Central Bank (ECB) faces a dilemma: raising interest rates could weaken the euro further, exacerbating inflation.
- A weaker euro increases import costs, which can counteract the intended effect of raising rates.