FirstFT: Investors ramp up bets against euro as energy crisis intensifies

Good morning. Investor bets that the euro will fall in value have reached their highest level since the coronavirus pandemic hit Europe more than two years ago, as the risk grows that record energy prices will drag the region into recession.

Rising wagers against the euro also reflect bullishness on the US dollar, which has been boosted by the Federal Reserve’s signals — reinforced by chair Jay Powell on Friday — that it will keep raising interest rates to tackle soaring inflation even in a slowdown.

As well as the threat of recession, Europe is grappling with steeply rising prices. At the annual gathering of central bankers in Jackson Hole this weekend, European Central Bank executive board member Isabel Schnabel and François Villeroy de Galhau, the French central bank governor, warned that monetary policy would stay tight for an extended period in Europe.

Speculators built up net short positions on the euro — a way to bet the currency will drop in value — of 44,100 contracts in the week to August 23, up from 42,800 the previous week, according to data from the Commodity Futures Trading Commission.

It marks the largest bearish position against the euro since the first week of March 2020, when investors held net short positions of 86,700 contracts as the eurozone economy plummeted into a record postwar contraction.

Thanks for reading FirstFT Europe/Africa. Have a great week — Gary

Five more stories in the news

1. Abrdn poised to drop out of FTSE 100 The seventh-worst-performing stock among UK blue-chips this year, fund manager Abrdn is expected to be relegated from the FTSE 100 this week for the first time since the 2017 merger between Standard Life and Aberdeen Asset Management, two of the country’s biggest names in fund management.

2. NHS backlog drives rise in self-pay care Self-pay admissions — in which people fund their own healthcare rather than use private health insurance — rose 39 per cent across the UK in the two years to the end of 2021, according to the Private Healthcare Information Network, as patients despaired of record NHS waiting lists.

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3. UK gigafactory plan hit by energy costs Britishvolt, the start-up at the heart of the UK’s electric-car industry plans, will not deliver batteries from a £3.8bn gigafactory for another three years because of soaring energy costs, co-founder Orral Nadjari said. Britishvolt had originally targeted production to start at the facility in Blyth, north-east England by late 2023.

4. Boom chief fights supersonic travel headwinds Dispelling industry scepticism, Boom Supersonic chief Blake Scholl said the company has the demand and technology to make ultrafast jet travel profitable almost 20 years after Concorde’s retirement. “There’s a need for hundreds, if not thousands of these aeroplanes,” Scholl said. New York to London flights would be cut from 6.5 hours to 3.5 hours.

5. EU must speed up renewables, says Denmark Dan Jørgensen, Denmark’s energy minister, has called for governments to do more to ease approvals for renewable energy projects and diversify away from Russian fossil fuels. Denmark was the first country to build an offshore wind farm, in 1991, and aims to become a net exporter of green energy by 2030.

Clarification: Friday’s edition of this newsletter included an entry about Angola’s recent election. The Popular Movement for the Liberation of Angola has been in power for 47 years, since independence from Portugal. João Lourenço was elected president in 2017.

The day ahead

Russia travel sanctions EU defence ministers will meet in Prague today to discuss a Brussels-run training mission for Ukrainian soldiers. Foreign ministers begin a two-day meeting tomorrow on suspending EU tourist visas for Russian nationals across the Schengen area.

Corporate earnings Russian state-owned energy group Gazprom releases second-quarter figures, Fortescue Metals Group reports its fourth-quarter data and South African retail company Massmart Holdings publishes half-year earnings. Continental and Sun Pharma hold annual meetings.

Nasa launch The huge Space Launch System rocket is set to lift off from the Kennedy Space Center in Florida, in the first flight for Nasa’s Artemis programme and the space agency’s first in 50 years of a vehicle capable of carrying humans to the Moon. Watch a live stream here. (FT, Nasa)

Tennis The US Open Tennis Championships begin in New York City.

UK markets are closed today for a bank holiday.

What else we’re reading

Liz Truss’s not-so-special relationship Britain’s foreign secretary, on the cusp of becoming prime minister, has at times irked US officials with a not-so-diplomatic style that has been described as blunt, binary and assertive. Some say Truss is quick to take maximalist positions without thinking of the consequences.

A post-dollar world is coming The dollar surged this month to levels not seen in nearly 20 years. Since the 1970s, the typical upswing in a dollar cycle has lasted about seven years — the current is in its 11th. A decline could be near, and could last longer than it did two decades ago, writes Ruchir Sharma.

Europe’s port cities vs the cruise ship Cruises are back on the holiday agenda after a two-year slowdown. But while demand is approaching pre-pandemic levels, residents and politicians in the cities where cruise enthusiasts step ashore have not all welcomed them back with open arms.

Vaccines against malaria — ‘the breakthrough tool’ Malaria killed more people in Africa in 2020 than Covid-19, mostly young children. Having helped create the AstraZeneca Covid-19 drug, Oxford scientist Adrian Hill tells Henry Mance he has another urgent goal: to eliminate malaria through vaccination.

Is Jake Freeman an investor or a gambler? The 20-year-old student invested $27mn in homeware brand Bed Bath & Beyond and made $110mn selling it only a few weeks later. In the process, he became a poster boy for the “meme stock” generation that has spent the past years looking for big quick wins, Patrick Jenkins writes.

Property

From the Connecticut country home of Mark Twain to the Grade II-listed London house that was once the residence of Virginia Woolf, here are five prime properties with literary connections.