- Euro was being underpinned by €500 billion recovery fund
- ECB minutes in focus for further clues
- US – Chinese tensions flare up as China plans to restrict freedom in Hong Kong
- At 08:15 UTC, EUR/USD is trading -0.38% at US$1.0907 >> Real time exchange rate
It has been a week of two halves for the Euro US Dollar exchange rate. After rising across the first half of the week, to a 3-week high on Wednesday of US$1.1010, the Euro has since been declining. The pair settled on Thursday -0.26% at US$1.0950.
At 08:15 UTC, EUR/USD is trading -0.38% lower at US$1.0907. Even so, the Euro US Dollar exchange rate is still on track to gain across the week after two straight weeks of decline.
The Euro has been well supported for most of the week following the announcement of French German agreed Recovery Fund. The €500 billion fund aims to provide support to those sectors and countries worst affected by the coronavirus outbreak, backed by collective borrowing by the entire bloc. The agreement represents an important break from orthodoxy as German agreed to back the idea of collective European dent. This has underpinned a strong rally in the Euro earlier in the week.
Today investors will look towards the release of the minutes from the European Central Bank meeting in April. Investors will be looking for further clues as to why the central bank kept policy unchanged, whilst pledging mire liquidity through its Pandemic Emergency bond purchase programme if needed.
Demand for the safe have US Dollar is on the rise in early trade on escalating geopolitical tensions. Reports that China is planning a new security bill, which will be entered directly into Hong Kong’s mini constitution, bypassing the territory’s Legislative Council is unnerving investors
The show of legal force threatens to reignite the pro-democracy demonstrations of last year and has angered the US. President Trump respond quickly warning China that the US will react strongly to such a move which limits freedom in the financial hub, with sanctions already being drawn up.
With no high impacting US economic data for investors to focus on, sentiment will drive movement in the US Dollar today. Investors will continue monitoring US – Chinese relations as the week-long Chinese annual parliament meeting started today. Here senior officials deliver their plans on defence, diplomacy and a range of the issues including relations with the US.