What Does Austria’s Lockdown Mean for the Euro?

Not the news we would have liked to finish the week with, but it’s just been announced that Austria will go into full national lockdown from Monday for 20 days. They’re seeing record case numbers and they have one of the lowest vaccination rates in Western Europe.

The problem right now is that case numbers are high throughout Europe. Germany is also seeing its intensive care wards filling up so they may have to take action as well. But now that Austria has taken action, they may be the first domino that leads to others doing the same. It’s obviously not popular for policymakers to force restrictions on people, but once one country has done it, it opens the doors for others.

The Chancellor of Austria said, “Sustainably increasing the vaccination rate is the only way to get out of this vicious circle… Too many people have behaved with a lack of solidarity”.

The euro had already been taking quite a beating this week as finally, the forex markets were showing the concerns we were seeing in other markets first. It’s clear the conversation with the Federal Reserve in the US is now focused on interest rate hikes, and the Bank of England are expected to raise rates possibly in December, especially with the data releases this week. But the ECB are nowhere near tightening right now.

It seems Christine Lagarde has no interest in what the markets think and is only concerned about the economy. Just yesterday she said: