- Euro (EUR) rallies amid risk on mood in the market and despite German factory orders missing forecasts
- Eurozone investor sentiment data and retail sales in focus
- US Dollar (USD) trends sharply lower as economic recovery optimism overshadows rising covid-19 numbers
- Euro US Dollar (EUR/USD) exchange rate trades at US$1.13
The Euro US Dollar exchange rate is extending gains from the previous week. The pair settled on Friday at US$1.1250 after gaining 0.3% across the week as a whole. At 07:15 UTC, EUR/USD trades +0.4% at US$1.13 amid a broad risk on climate.
German factory orders rose, but less than forecast in May, even after lockdown measures were eased. Orders rose 10.4% following a -37% slump across March and April combined. Whilst the data suggests that the Germany economy has passed the worst, the slow recovery shows how difficult it will be to repair damage caused by the pandemic.
Investors will now look ahead to retail sales for the region which are expected to show -15% decline month on month in May, down from -11% drop in April. However, Eurozone investor sentiment is expected to improve, in an encouraging sign for the recovery.
Investors continue to focus on the rebounding global economy rather than rising coronavirus figures. Optimism is growing that the revival in the Chinese economy will sustain the global recovery. Chinese data has been upbeat whilst mobility data shows that life is returning to normal. Chinese stocks are trading at 5-year highs. This is boosting the mood in the market, dragging on the safe haven US Dollar.
US coronavirus cases continue to be a concern. The number of new cases slipped slightly to 53,000 on Sunday, down from a record 57,000 on Friday. Areas of the US sunbelt are rolling back reopening measures in an attempt to bring the spread of the virus under control. Fears linger that rising covid numbers could knock the fragile economic recovery off track.
US non-manufacturing PMI data will be in focus. Analysts are expecting that the dominant service sector is almost back in expansionary territory. A strong reading could boost sentiment and drag on the safe haven greenback.
