Germany recession news: Germany’s economy, the biggest in Europe, will suffer a recession despite a new government plan to spend €65 billion ($64.49 billion) to support consumers and businesses amid rising inflation, economists say.
The last package of support measures, adopted in response to accelerating inflation after the outbreak of hostilities in Ukraine in February, reached 95 billion euros. Meanwhile, the government has spent 300 billion euros to support the economy in the last two years of the coronavirus pandemic.
Is Germany in a recession?
Based on the widely accepted definition by economists, a recession is a decline in economic growth for two or more consecutive quarters.
Germany’s economic growth in Q2 was weak, and the conflict in Ukraine, rising energy prices, the pandemic and supply chain disruptions are now pushing the economy into a recession, which may have already happened.
Data released Monday showed that German service sector activity declined for a second straight month in August as domestic demand came under pressure from accelerating inflation and declining consumer confidence.
The shutdown of Europe’s Nord Stream 1 pipeline exacerbates problems in Germany, although the country’s gas reserves have reached 85% of storage capacity, data released Saturday showed. German Chancellor Olaf Scholz said the country “will be able to cope with this (crisis).”
Earlier we reported that the Pound collapsed to its lowest level since 1985.
Current gold prices combined above $1,700 an ounce
Current gold prices rose on Tuesday morning; the price was above $1,700 dollars per troy ounce, according to trading data.
The price of December gold futures on the New York Comex Exchange rose by $6.85, or 0.4%, to $1,708.85 per troy ounce. December silver futures rose 1.53% to $20,905 per ounce.
Daily gold prices were supported by a decline in yields on U.S. government bonds. Thus, the yield on ten-year government bonds (U.S. Treasuries) fell to 3.615% from the previous close of 3.651%, while at the beginning of Monday’s trading the indicator exceeded 3.8%.
U.S. Treasuries are an alternative investment to gold, which is why their quotes tend to move in different directions. As a result, gold gained 2.3% on Monday, from $1,670 to $1,710.
Earlier, we reported that oil rises in anticipation of possible OPEC+ production cuts.
Oil price rises in anticipation of possible OPEC+ production cuts
The price of oil rose on Tuesday as markets await an agreement from the OPEC+ meeting on a major production cut that will temper the impact of worries about the global economy.
Why is oil rising today?
Oil prices jumped more than $3 on Monday amid reports that OPEC+ will consider production cuts of nearly 1 million bpd at the cartel’s first off-line meeting since 2020 on Wednesday.
Brent crude futures rose 0.54% to $89.34 a barrel, while WTI crude rose 0.43% to $83.97 a barrel.
Voluntary reductions in oil production by individual OPEC+ member countries will be counted on top of the overall agreed quota cut, which could be the largest reduction since the pandemic began.
“Despite everything going on in Ukraine, OPEC+ has never been stronger, and they will do everything they can to provide price support,” OANDA’s Edward Moya wrote in a research note.
“While OPEC+ may be announcing a production cut of more than 1 million bpd, in reality the cuts could be much smaller. This is due to the fact that most OPEC+ members are already well below target levels,” ING analysts said in a note.
Rising prices may be limited by concerns about the state of the world economy and the desire of investors to lock in profits from the previous session, said Tina Teng of CMC Markets.
Earlier we reported the most important Forex news for October 3.
Most important forex news: what you need to know on October 3
Most important forex news: markets were relatively calm on Monday during Asian trading hours, but volatility increased in the early European morning. Market participants are closely watching the political developments in the UK ahead of S&P Global publishing its final September PMI indices for Germany, Eurozone, the UK, and Canada.
Important news for forex trading – what should a trader look out for?
Let’s take a look at important news for forex trading. At the end of the day, the US will release the ISM manufacturing PMI for September. Several FOMC policymakers, including Kansas City Fed Governor Esther George and New York Fed Chief John Williams will also make speeches later in the day.
After a modest rise on Friday, the U.S. dollar index turned south and broke below 112.00. U.S. stock index futures are trading mixed in the European session, and the benchmark 10-year U.S. Treasury bond yield is losing more than 1 percent, falling below 3.8 percent.
In Asian trading hours, data from Japan showed that the Tankan Large Manufacturing Business Activity Index fell to 8 in the third quarter, missing market expectations of 11. On the positive side, the non-manufacturing business activity index rose to 14 in the same period from 13.
Meanwhile, Japan’s Finance Minister Shunichi Suzuki reiterated that the government keeps a close eye on exchange rate fluctuations. USD/JPY reacted to Suzuki’s comments.
Earlier we reported that American dollar rate declines against the euro and pound, and goes up against the yen.
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