- Safe haven US Dollar (USD) slips after Fed starts buying up corporate bonds and Trump weighs up additional $1 trillion stimulus package
- US retail sales expected to print record surge 8% in May
- Euro (EUR) investors await Eurozone ZEW Sentiment data, which is expected to show an improvement
- At 07:15 UTC, Euro US Dollar exchange rate (EUR/USD) trades +0.1% at US$1.1336
The Euro is advancing versus the US Dollar on Tuesday, extending gains from a late turnaround in the previous session. The Euro US Dollar exchange rate settled on Monday +0.6% higher at US$1.1324.
At 07:15 UTC, EUR/USD is trading +0.1% at US$1.1336 following more stimulus from the Fed, stimulus talk from Trump and ahead of German ZEW sentiment data and US retail sales figures.
The Federal Reserve announced that it will start to buy corporate bonds today, broadening its quantitative easing programme. The additional stimulus boosted sentiment across the market, dragging the safe haven US Dollar lower.
Adding to the risk on mood and weighing on the US Dollar are reports that the Trump administration is considering an additional stimulus package in the form of $1 trillion infrastructure spend. This would be spent on more traditional infrastructure projects such as roads and bridges, in addition to 5G networks and local broadband.
Investors will now look ahead to the release of US retail sales data later. US retail sales are expected to record a record rise in May as lockdown restrictions were eased and 2.5 million Americans went back to work. Analyst are expecting an 8% increase in sales, beating the previous record of 6.7% in 2001. However, this would only make up a quarter of the sales decline registered between March – April.
An upbeat reading could help boost risk sentiment, adding to evidence that the US economy is rebounding strongly, dragging the safe haven US Dollar lower.
Sticking with macro-economic releases, Euro investors will look ahead to the release of ZEW sentiment data, which reflects institutional investors opinions over the next six months. The headline Economic sentiment index is expected to improve to 60 in June, compared to the 51 reading in May thanks to the optimism surrounding stimulus in the region and the global economic recovery.
