GBP/EUR: Euro Slips vs Pound As Trade Wars Hit Germany
  • German covid-19 rate of transmission shows spread is increasing
  • Euro (EUR) looks ahead to consumer confidence for clues on strength of economic recovery
  • Safe haven US Dollar eases despite covid numbers rising in some states
  • Euro US Dollar exchange rate (EUR/USD) pierces US$1.12

After four consecutive days of losses, the Euro is pushing higher versus the US Dollar. The Euro US Dollar exchange rate tumbled -0.7% across the previous week as fears of a second wave of coronavirus infections dragged on risk sentiment.

At 07:15 UTC, EUR/USD is trading +0.2% at US$1.12, at the top end of the daily traded range.

The Euro is brushing off concerns of a rising R rate in Germany. The R number, which measures the rate of spread of coronavirus jumped from 1.79 to 2.88 in the space of 4 days. An R rate over 1 means that the virus spread is increasing as lockdown measures ease in Europe largest economy. Investors will be watching closely to see if and how quickly Germany can bring this latest flare up under control.

Data this week will be all about June surveys. Consumer confidence data today should provide a good sense of how quickly sentiment is recovering as economies across the region gradually reopen. Rebounding sentiment will be key for a recovery in domestic demand. Analysts are expecting consumer confidence to gradually increase to -15 in June, up from -18.8.

The US Dollar rallied last week as investors bought into its safe haven properties amid rising fears over a second coronavirus wave. The recent flare up in Beijing is showing signs of fading, which is offering some support to risk sentiment. However, a record number of daily cases in California and jump in Florida will keep investors cautious.

This week is a fairly quiet week on the US data front, with the data flow mainly focused on housing reports and durable goods orders later in the week. Mortgage applications continue to increase thanks to rock bottom borrowing costs and ample credit availability. This offers a positive outlook for the US housing market.