The Euro is edging lower versus the US Dollar on Thursday, extending losses from the previous session. The Euro US dollar exchange rate dropped 0.5% to close at US$1.0943 amid broad dollar demand.
At 08:30 UTC, EUR/USD is trading down -0.34% at US$1.0876 after having picked up from session lows of US$1.0813. Investors are digesting further action from the European Central Bank.
Euro Drops s ECB Floods Market
The Euro is on the back foot for a third straight session on Thursday as investors weigh up the latest move by the ECB to support the fragile economy through the coronavirus hit. The ECB announced on Wednesday evening a €750 billion bond buying programme called the Pandemic Emergency Purchase Programme (PEPP).
The additional purchases would be carried out over the rest of this year and cover both sovereign and corporate debt. The programme will last until the coronavirus crisis is judged to be over. Christine Lagarde said that there are no limits to the ECB’s commitment to the euro.
The move by the ECB has sent the euro lower and appears to have helped soothe investors as European stocks are performing better so far this morning. Whether they will be able to hold their gains until the afternoon remains to be seen.
US Dollar Demand Soars
Demand for the dollar has soared and this is not owing to a strong outlook for the US economy., In fact the outlook for the US economy is actually very grim. As the world’s reserve currency and key safe haven asset the dollar is one of the few benefactors of the coronavirus epidemic. As the financial markets see wild swings and concerns grow over tightening liquidity, the dollar is advancing.
The dollar continues to gain despite the Federal Reserve pumping billions of dollars into the market. In addition to stimulus from Federal Reserve, Trump also signed a coronavirus $100 billion aid package into law which include provisions for paid leave for all workers as well as free testing.
Congress is also working on a massive stimulus package to avoid an economic disaster as more stringent measures are applied to society to prevent the spread of the killer virus.
