- Fears of a second wave of coronavirus boost safe have US Dollar (USD) flows
- Markets broadly ignore White House economic director Larry Kudlow’s more upbeat outlook for US economy
- Euro slips as investors look ahead to tomorrow’s ZEW sentiment data
- At 07:15 UTC, Euro US Dollar exchange rate (EUR/USD) trades -0.1% at US$1.1240
The Euro is falling towards US$1.12, extending losses from the previous week. The Euro US Dollar exchange rate lost 0.3% last week, settling on Friday at US$1.1256.
At 07:15 UTC, EUR/USD is trading -0.1% at US$1.1240. This is towards the lower end of the daily traded range, as rising coronavirus cases in areas of the US and in Beijing raise fears of a second coronavirus wave hampering the global economic recovery.
Fears of a second wave of coronavirus infections and the possibility of renewed lockdown measures are weighing on risk sentiment on Monday, boosting demand for the safe haven US Dollar whilst weighing on perceived riskier currencies.
24 US states have seen a steep rise in coronavirus cases, including in Florida and Arizona which have seen a record rise in daily cases. An outbreak of nearly 100 cases in Beijing has also raised fears of a resurgence of the pandemic in China, the world’s second largest economy.
US White House Economic Director Larry Kudlow gave a more upbeat outlook on the US economy than Federal Reserve Chair Jerome Powell, last week. However, the markets have broadly ignored his optimism with US stock markets also pointing to a sharp move lower on the open.
There is no high impacting US data today. Sentiment will drive the US Dollar and investors will look ahead to US retail sales data tomorrow ahead of Jerome Powell’s testimony before congress on Wednesday and Thursday.
The Euro showed some resilience versus its safe have counterpart in the previous week following a mixed bag of data. German industrial production was significantly worse than what analyst had anticipated at -17.1% contraction month on month in April. However, Eurozone GDP data revealed that the region contracted a better than expected -3.6% in the first three months of the year.
There is no high impacting Eurozone data due for release today. Investors will look ahead to ZEW Sentiment data for June. This will give investors a clue as to how the economic recovery is progressing, as countries continue to ease lock down restrictions.