The Euro versus US Dollar exchange rate closed -0.1% lower on Wednesday at US$1.1262. The Euro is rebounding versus the US Dollar on Thursday as risk off continues to drive trading across the financial markets. President Trump announced he is restricting travel from Europe for 30 day after the World Health Organisation declared a pandemic.
At 08:30 UTC EUR/USD is trading +0.1% at US$1.1270, with investors looking ahead to the ECB rate announcement.
ECB To Cut Rates?
So far, the ECB has not made an unscheduled move, cutting rates like the Federal Reserve or the Bank of England to shore up the Eurozone economy. However, market participants are expecting some action today.
The ECB has much less room to move given that interest rates are already in negative territory and given the current asset purchase programme. However, the ECB are still broadly expected to cut rates by 10 basis points and increase bond buying in an attempt to support the economy.
The ECB meeting will be going ahead to a backdrop of rising coronavirus cases across the eurozone, despite heavy containment measures. All shops in Italy, except pharmacies will close as part of the nationwide lock down programme.
Dollar Drops On Trump’s Travel Ban
The US Dollar is under pressure across the board in early trade on Thursday as Trump talks tough. President Trump, last night, announced a travel ban to and from Europe, along with a package of measures to support workers and businesses in an attempt to mitigate some of the strains on the economy.
In addition to the travel ban to and from mainland Europe Trump brought in measures such as relief for ill or quarantined workers and liquidity measures to support small firms. However, there was still no news on the payroll tax cut which needs to make its way through Congress.
Despite these bold moves by Trump, plus the Fed cutting interest rates by 50 basis points last week, financial markets are still plummeting. The US stock market futures are pointing to another 5% sell off on the open today as fear continues to drive the markets,
According to the CME Fedwatch, investors are expecting an additional rate cut from the Fed next week at the scheduled monetary policy meeting, which is adding pressure to the dollar.
