- Euro (EUR) lifted by upbeat sentiment surrounding vaccine news
- German inflation and sentiment data due tomorrow and the ECB meeting later in the week
- US Dollar (USD) declines ahead of US earning season
- US coronavirus numbers continue to rise
After gaining 0.4% across the previous week, the Euro US Dollar exchange rate is extending those gains at the start of the new week. At 07:15 UTC, EUR/USD trades +0.3% higher at US$1.13332. It continues to trade within a familiar range.
The Euro managed to advance across the previous week despite the European Commission slashing growth forecasts for the bloc, indicating that the eurozone is heading for a deeper recession.
Newsflow surrounding coronavirus treatment lifted risk sentiment and the common currency at the end of last week.
A study on Remdesivir showed that the drug reduced coronavirus fatalities by 62%. Boosting sentiment further Pfizer and BioNTech announced that their vaccine could be approved by the FDA by December this year. A vaccine is the quickest and surest way for the global economy to bounce back to pre-coronavirus levels of growth, which explains why the market is so sensitive to any vaccine news flow.
This week is a busy week for the Euro, with several high impacting data points in addition to the European Central Bank monetary policy announcement and the EU leaders’ summit,
There are no influential data releases due today, leaving the Euro vulnerable to sentiment. Tomorrow, German inflation and ZEW sentiment data will be in focus, with analysts expecting both readings to show signs of improvement.
The US Dollar is out of favour at the start of the week as investors look towards the start of US earning season with a cautiously optimistic view, which is overshadowing concerns surrounding the rising number of coronavirus cases.
Earnings from big names such as JP Morgan, Citigroup, Goldman Sachs, Johnson & Johnson and Netflix will provide further clues over the impact of the coronavirus crisis on corporate America in the lockdown period and potentially give clues over the outlook.
Florida saw its biggest jump in coronavirus cases since the US outbreak started. Meanwhile the US continues to see 60,000 new cases per day. For now this is being brushed off on hopes that the economic recovery can continue regardless.