- The US dollar recaptures lost ground as fiscal stimulus hopes are in play.
- Germany posts robust economic numbers.
- EUR/USD bullish flag near a critical resistance level, suggests a further upswing
The US dollar performed well during the Asia-Pacific session and regained its recent losses against major competitors. Its strength amplified the weakness in the New Zealand dollars after RBNZ expanded its quantitative easing program.
Bond yields went higher while gold and silver lost further ground. The haven-linked Yen traded flat and pro-risk Australian dollar shed its value to touch 0.71 US dollars.
UK GDP might prove to be market moving before the US July CPI comes in.
Euro Might Gain Strength from Upbeat German Data
Germany’s ZEW economic sentiment index rose to its highest level for the last 16 years, underpinning hopes of the country’s fast recovery from the recent setback due to the pandemic.
This upbeat data is after the 27.9 Percent jump in German factory orders and 8.9 Percent rise in industrial production, both in June. These figures beat market expectations by a wide margin.
But, European Central Bank Chief Economist Philip Lane was not so optimistic. He had cautioned that the level of economic slack remains extraordinarily high and the outlook remains uncertain while referring to the recent rebound in economic data.
The climbing coronavirus cases and fatalities can continue to weigh on the common currency. The recent increase in cases has prompted Germany to reclassify Spain’s capital, Madrid, and the surrounding Basque region among high-risk travel areas. Such actions to curtail the spread of the pandemic can affect market sentiments and prompt risk aversion leading to a weaker performance by growth-oriented currencies, including the euro.
