Broad Euro Weakness About More Than USD Strength (2/3)

The daily nominal EER-42 euro effective exchange rate's 8% drop from the most recent peak in December 2020 is mainly the result of broad USD strength, but EUR performance is quite mixed otherwise.

• The USD is up by 22% vs EUR since Dec 2020, and accounts for around 16% of the nominal basket, the largest single weighting.
• The Euro is holding its own slightly better against the next two highest-weighted currencies of China (14%) and the UK (12%) (of course, both of those are weakening vs the USD as well).
• EURGBP has been relatively flat since Q1 2021, which is helping limit damage to the broad euro index compared to the bilateral EURUSD rate which has gone back through parity. In fact, the GBP's 8% gains vs the EUR are exactly in line with overall EER-42 weakness.
• EURCNY is tracking the dollar's overall strength (CNY is up 17% vs EUR since Dec 2020), but EUR remains above the July lows vs CNY for now.
• Apart from the US+China+UK components totalling 40% of the basket, others with greater-than-2.5% weightings are Switzerland (6%), Poland (5%), Japan (4%), Czech (4%), Sweden (3%), Russia (3%), Turkey (3%), India (3%) (all rounded). Full weightings are here.
• Returns for those currencies vs EUR since Dec 2020 are mixed: TRY is down 48%; SEK is down 4%; JPY is down 8%; PLN is down 6%. Conversely: CHF is up 12%; CZK is up 7%; INR is up 13%; RUB is up 55%.

Source: BBG, MNI