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Daniel Kral highlights that the recent appreciation of the euro is creating significant difficulty for German exporters to the U.S., on par with the impact of higher U.S. tariffs.
He adds that the undervalued Chinese Renminbi, which is 20% to 30% below fair value, is intensifying competition in third markets. Without a euro devaluation, Kral suggests the European Union may adopt more protectionist measures to defend its own market.
Kral previously noted that Eurozone exporters have suffered a larger competitiveness loss in the U.S. than in China due to euro appreciation. In a separate analysis, he reported that EU gas storage refill has been slow as front month gas prices remain elevated, with expectations for a faster pace if the futures curve shifts later in the year. These recent developments highlight ongoing pressures facing European producers.