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The Impacts of Natural Gas Prices
The price of natural gas in Europe is reaching astronomical levels. Natural gas is largely seen as a proxy for greater European energy prices.
Russia has severely restricted the exports of natural gas to European nations and concerns are mounting that the prices could rise even further in the winter months.
The massive spike in energy markets, especially heading into fall and winter, is likely to put a weight around economic growth in Europe through the second half of the year as businesses and households grapple with increased energy and heating costs.
These economic impacts will also complicate the European Central Bank’s efforts to tamp down inflation, making it much more difficult to stomach the economic costs of rising rates. If the ECB is constrained in tackling inflation, the Dollar is likely to continue to gain against the Euro, further fueling the run-up the Dollar has had over the last several months.
Source: Helios Quantitative Research, Bloomberg