Trump's comeback makes euro sink: What's next for European money?

European currency faces tough times as Trump heads back to White House. Markets react to possible new trade rules while German economy shows signs of weakness in late-2024

November 12 2024 , 10:39 AM  •  386 views

Trump's comeback makes euro sink: What's next for European money?

The euros value dropped hard after Donald Trump showed strong comeback signs in polls‚ hitting $1.065 versus dollar and giving up its gains since spring

German economic troubles make things worse - about 41.5% of companies dont have enough orders (the worst since 2008-09 crisis). The countrys car-makers and factories face big problems due to China slow-down and energy costs: their situation might get even more difficult with possible 10-20% US tariffs

Trade between US and Germany is huge - last year it was worth €252.5bn (just a bit less than German-China trade). Silvia Ardagna from Barclays thinks companies will slow down their plans: “business investment and hiring will likely delay due to tariff uncertainty“

The ECB faces a tough choice; inflation is still high but growth looks weak. Interest rates in Europe (now at 4%) stay lower than US ones (5.5%) which makes euro less attractive. James Reilly from Capital Economics says: “We see euro going down to $1 by late-2025“

Here are main issues that push euro down:
* New US tariffs might hit German exports hard
* Chinaʼs property market problems affect German trade
* ECB might need to cut rates faster than planned
* Dollar gets stronger due to higher US rates

German economy - once Europes powerhouse - hasnt grown past its pre-covid size yet. With Trumpʼs possible new 60% tax on Chinese goods‚ experts think German exports to China could drop 6% by 2030 versus current forecasts