- Euro shows resilience as lock down eases further
- Fed Chair Jerome Powell warns of -30% contraction to US economy in Q2
- US-Sino relations back in focus amid US restrictions on Huawei
- At 08:15 UTC, EUR/USD is trading flat at $1.0816 >> Real time exchange rates
The Euro is holding steady above US$1.08 at the start of the new week, after slipping 0.2% across the previous week. The Euro US Dollar exchange rate settled on Friday at US$1.0816.
At 08:15 UTC, EUR/USD is trading flat at US$1.0816 as the pair continues to trade in a familiar range, in a subdued session. With no high impacting data due from either side investors are taking stock of recent events.
The Euro is trading cautiously as economies across the region continue to gradually ease lockdown restrictions. The common currency has shown some resilience since GDP data last week showed that Germany, the Eurozone’s largest economy contracted by -2.2% in the first quarter. The bloc as a whole contracted -3.8% in the first three months of the year.
Investors will now focus on ZEW German investor sentiment data due for release tomorrow. Recent hard data is showing the extent of the damage that the coronavirus pandemic has caused. Meanwhile sentiment data is closely watched because it can provide clues as to what the recovery could look like. An uptick in investment sentiment and current conditions is expected.
The US Dollar is struggling for direction as trading kicks off for the new week as investors digest worsening US – China relations, a stark warning from Federal Reserve Chair Jerome Powell and amid the gradual return to normality for the US economy.
In an interview over the weekend, Jerome Powell warned that the US economy could contract -30% in the second quarter owing to the coronavirus pandemic. He also warned that the economic recovery could be drawn out and extend towards the end of next year. However, Mr Powell was confident that a Great Depression on the scale of that experienced in the 1930’s would be avoided.
His comments came after data last week showed that US retail sales dived 16% month on month in April, the worst reading ever recorded. However, consumer sentiment rebounded in May in an encouraging sign that the worst is in the past.
With no high impacting US data to be released investors will continue to monitor US – Chinese relations after the White House restricted the access of Chinese giant Huawei to American made chipsets. An elevation of trade tensions could boost demand for the safe haven greenback.