Good morning,
Over the weekend, the Italian government shut down the annual Venice carnival as Europe suffered its worst outbreak of Coronavirus to date. So far, 153 cases have been reported in Italy, making it the worst affected country within the Eurozone. Quarantine zones have been erected between the wealthy Milanese and Venetian provinces in the north of the country which, if extended across the nearby borders of France, Switzerland, Austria and Slovenia, could yield tremendously damaging implications for trade on the continent.
In short, the Euro has suffered a double whammy of not only being caught in a trade gap produced from a lack of Chinese activity, but also by the fear that similar quarantine zones may spring up all over Europe. Couple this with the fact that China, being Germany’s second-largest trading partner, hasn’t been buying much before the advent of Coronavirus due to the ongoing US/China trade war, and it isn’t hard to imagine things getting significantly worse for the Euro in the short-term.
Have a great day.
Author: Joshua Haden-Jones, Senior Relationship Manager
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