• GFK Consumer confidence ticks higher
  • Vaccine hopes & reopening economies boost sentiment
  • US consumer confidence data expected to increase to 88 vs 86.9 in May
  • At 08:15 UTC, EUR/USD is +0.3% at US$1.0930 >> Real time exchange rate

Upbeat sentiment is helping the Euro to advance, paring mild losses from the previous session. The Euro US Dollar exchange rate settled on Monday -0.07% at US$1.0900.

At 08:15 UTC, EUR/USD is trading +0.3% at US$1.0930. This is at the upper end of the daily traded range following improving German consumer confidence and ahead of US consumer morale data.

German GFK consumer confidence ticked higher to -18.9 in June, up from the all-time low of -23.1 in May as sentiment improves with the easing of lockdown measures. Whilst this is a step in the right direction, it is still a long way from pre-coronavirus levels of +2.3 in March.

The data comes following yesterday’s German IFO business sentiment numbers which also showed that firms were feeling more optimistic about the future.

The euro is also being buoyed by news that the German government agreed to a €9 billion bailout for Lufthansa. Under the terms of the bailout, the state fund will take a 20% stake in the airline in a long-awaited rescue package.

The broad mood in the market is more upbeat on Tuesday, as economies across the globe ease lockdown restrictions and as hopes for a vaccine grow. Novavax is the latest US company to announce that its vaccine is moving to human trials with results expected in July. The news comes after Moderna announced encouraging results in its first stage human trials last week.

The upbeat mood has translated into risk on trading, meaning riskier assets and currencies are in demand whilst safe havens, such as the US Dollar, are out of favour. Stocks across Europe are trading over 1% higher and US futures are also pointing to a stronger start on Wall Street.

Looking ahead investors will turn their attention to US consumer confidence data. Analysts are expecting consumer morale to tick higher in May to 88, up from April’s six year low of 86.9. The data comes against a backdrop of dire labour market statistics. With 25% of the American working population having signed up for unemployment benefits over the past two months its difficult to envisage a sharp rebound in confidence.

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