- Euro (EUR) supported by improving market sentiment amid vaccine optimism
- Eurozone unemployment due after strong Eurozone data on Wednesday
- US Dollar (USD) lower in risk on trading ahead of US jobs data
- Euro US Dollar (EUR/USD) exchange rate trades at top of daily range
The Euro is extending gains for a second straight session versus the US Dollar after settling on Wednesday +0.2% at US$1.1252. At 07:00 UTC, EUR/USD trades +0.2% at US$1.1275.
News that a vaccine candidate from Pfizer and Germany’s BioNTech has produced a strong immune response and is being well tolerated in early human trials is lifting the mood in the market on Thursday, supporting the Euro whilst dragging on the safe haven US Dollar.
The improving mood follows on from upbeat Eurozone data in the previous session. German retail sales smashed expectations surging +13.9%, significantly higher than the +3.9% increase expected. Manufacturing activity data also surprised to the upside in Germany and the Eurozone as a whole. The strong data boosted hopes that the downturn caused by the coronavirus lockdown may not be as severe as initially feared.
Attention will now turn to Eurozone unemployment figures, which are only expected to show a small tick higher to 7.7%, up from 7.3%. The low levels of unemployment compared to the US is because of widespread government wage support schemes in Europe.
The US Dollar is trading on the back foot as investors ditch the safe haven in favour of riskier assets and currencies. Stronger than forecast ISM manufacturing PMI data added to the risk on mood, after showing that the sector unexpectedly expanded in June. However, rising US coronavirus cases could keep risk sentiment in check as areas of the US halt reopening plans and 48,000 new cases were reported on Wednesday.
Attention will now turn to the US non-farm payroll report, which will shed light on whether the US is able to sustain its fragile economic recovery even as covid-19 numbers surge across the south of the country.
Analysts are expecting 3 million jobs to have been created in June, adding to May’s 2.5 million as the market continues to recover from April’s 20 million job losses. The unemployment rate is expected to tick lower to 12.3%, down from 13.3%.