- Euro (EUR) holds gains after ECB policymaker indicates that the downturn hasn’t been as severe as forecast and after EU recovery fund was agreed.
- No Eurozone data due today, consumer confidence data is due tomorrow
- US Dollar (USD) holds steady as optimism fades over US stimulus bill being agreed this week
- US covid cases reach 4 million and Trump warns the situation will get worse before it improves
The Euro US Dollar exchange rate (EUR/USD) is holding steady as the recent rally pauses for breath. The pair settled +0.7% higher in the previous session at US$1.1528.
At 06:45 UTC, EUR/USD trades flat after easing back from an 18-month high of US$1.1547 reached earlier in the session.
The Euro remains well supported after comments from European Central Bank policy maker De Guindos who said that high frequency data suggests that the contraction in the Eurozone economy won’t be has deep as initially expected. The upbeat comments came following the agreement of the EU recovery fund.
Yesterday a €750 billion rescue package for the EU was finally agreed. The package will be divided between €390 billion in grants and the remainder in loans to those countries most affected by the coronavirus pandemic such as Spain and Italy.
There is no high impacting Eurozone data due to be released today. Investors will look ahead to German and Eurozone consumer confidence figures due tomorrow, which will provide further clues as to how the economic recovery is progressing.
The US Dollar is trading broadly flat versus its major peers on Wednesday as optimism fades over further US stimulus being agreed this week. Whilst the Republicans are pursuing a relief package to the tune of $1 trillion, the Democrats are looking for stimulus in the region of $3 billion. With significant differences remaining between the two sides, hopes that the fiscal stimulus relief package will be agreed by the end of the week are fading.
Meanwhile US coronavirus cases continue to soar with the grim 4 million cases milestone breached. President Trump warned that the pandemic would get worse before it gets better.
Looking ahead US existing home sales data is the only release on a quiet US economic calendar.
