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The Euro Reacts to ECB President’s Comments, Ryanair Is Set to Delist From LSE & Austria Enters Lockdown Once Again

Euro falls to lowest since July, on dovish Lagarde comments

The Euro dropped to its lowest levels since June, as markets reacted to comments for ECB President, Christine Lagarde.

Speaking on Friday, the leader of the European Central Bank played down the sentiment for a rate hike, as she anticipated a slowing of inflationary pressures.

Lagarde stated that, “When inflation pressure is expected to fade – as is the case today – it does not make sense to react by tightening policy”.

💡 GBP, taking a lot of ground vs the Euro this week
The Euro also weakened as Austria became the first country in western Europe to reimpose a full lockdown this autumn to tackle a new wave of coronavirus infections, and Germany did not rule out doing the same (but more on that later).

Supporting sterling, economic data this week – including UK inflation, job and retail sales numbers – bolstered expectations the BoE is ready to raise interest rates, after it surprised the market by keeping them on hold at its November policy meeting.

EURUSD dropped to an intraday low of 1.1249 on the comments before recovering above 1.1300, the intraday low marked the weakest level it has traded at since July 5th.

She went on to add that, “The tightening would not affect the economy until after the shock has already passed”.

FTSE 100 drops, as Ryanair set to delist from LSE

In the United Kingdom, the benchmark FTSE 100 was also trading lower, as news broke that Ryanair was looking to delist from the LSE.

The flight operator was said to be looking to move away from the London Stock Exchange due to the fees associated with its listing.

Ryanair said that trading volumes via the LSE had dropped and believes this is a direct result of Britain leaving the EU.

💡 Another effect of Brexit
UK and other non-EU-owned carriers cannot operate flights between other European countries, and while Ryanair is EU-based, 45% of its shares are held in the US – meaning it had to deter any further investors.

Ryanair’s CEO, Michael O’Leary said in October that Brexit had led to European stock ownership of the airline to below 50%.

Shares in Ryanair were down 1.81% on the news, with the FTSE 100 closing 0.45% lower.

Austria enters lockdown, as European COVID-19 cases rise

Austria announced on Friday that they will be entering a fourth national lockdown, as cases of COVID-19 continue to surge in the country.

This comes a day after the company recorded 15,145 new cases of coronavirus, which is a record high for daily positive tests.

As such, it is expected that the country will enter a nationwide lockdown on Monday, with a vaccine mandate also to follow.

💡 When will the pandemic end?
Increasingly desperate governments are losing their patience with vaccine skeptics and shifting from voluntary to obligatory measures to promote vaccinations and beat back a virus that shows no sign of waning, rattling global markets at the prospect that still tentative economic recoveries will be undone.

Some European countries, including Germany, which once seemed a model of how to manage the virus, are now facing their worst levels of infections in the nearly two years since the pandemic began.

Speaking on Friday, Chancellor Alexander Schallenberg said that, “We have not succeeded in convincing enough people to get vaccinated”.

The nation will now pass a mandate that will expect all citizens to become vaccinated, commencing from February 1st.

In relation to this, he stated that, “It hurts that such measures still have to be taken”.

“Sheer will and determination is no substitute for something that actually works.”

– Jason Klatt

Eliman Dambell

Senior Market Analyst

 

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