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00:00Jordan I mentioned earlier of the group. Martin Feldstein of Harvard who noticed that when you get weak euro like 1985 or 2000 in one you get a stochastic response it goes down it's weak and it turns around. Does this have the same feeling that when we find euro weak bottom we'll turn around and come right back. Tom you're kind of on the money there about the non-linear narrative of the euro moves this morning. It's politics. I can explain why it's moved but it's been non-linear. It's been much faster than folks expect it. A lot of people who are looking to the normal macro drivers the sort of ECB headlines to suggest why it could go lower. They didn't have that. It was Norwegian gas flows. We can come back to that. But answer to your question. I don't think euros a buy at all Tom. I think we go towards parity. I think we could even break parity. And the moves have been non-linear. When we do that it will be because of gas supplies being cut off perhaps in Nord Stream one. And I think as we get to these levels we broken ground levels all the way back to the French elections and so forth. Parents of very strong euro weakness. We've broken those in a no man's land now all the way down to parity. If we are non-linear does that suggest that Mr. Putin can drive euro lower. He already is. And I think yes he can do more. So to give you some more color on why I might keep mentioning gas the mood today is because German electricity prices go into your town hall type in Germany. Electricity one year the record highs for the one year part of the curve. So it's not a temporary story anymore. German consumers were paying record prices. Whoever's buying at these levels for the next year. And that's going to affect consumers contracts. So that's consumption squeeze for European consumers. That's recession risks recession risk push euro lower. Norwegian workers have gone on strike. So 13 percent of Norwegian gas supplies are turning off this week. And we've looked into it so we can let me know. But we don't see an end date to those strikes until their demands are met. That's certainly escalating uncertainty. Jordan this headline just crossed in a Bloomberg that could shut 56 percent of gas exports. Some further escalation. That's a problem. So can you tell me to what extent you're call on Eurodollar and you are looking for parity. I know that and have been for a while. To what extent is that cool. Basically called on European gas prices. It is a little bit like that. That's been the primary driver of the volatility especially today. There's a few other factors as well that feed into the euro view. It's not just about gas prices. Global recession risks. We're looking for a US recession in Q4 of this year. The euro does not strengthen when we have recessions especially with the peripheral yield risks that we have in Italy in Spain and elsewhere. So this recession risks driven by the global phenomenon. What's going on. Europe's main trading partner is China. China's going for what we call Covid business cycle. And we've just had another wave of Covid-19 cases. Some more lockdowns announced just over the past 24 48 hours. So the exports for Germany are being weighed on by gas prices making German manufacturing less competitive seven times more expensive. That's how much gas prices electricity prices are in Germany versus America. So American exports more competitive. And Europe's main trading partner China is in a state of slowdown dealing with lockdowns.

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Euro Could Break Below Parity With Dollar: Nomura’s Rochester

Jordan Rochester, G10 FX strategist at Nomura, says the euro's slide against the US dollar will continue due to rising natural gas prices and the risk of a global recession. "I think we go towards parity. I think we could even break parity," Rochester says on "Bloomberg Surveillance." (Source: Bloomberg)

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