- Euro (EUR) trades lower as risk sentiment is fragile on rising covid fears
- Eurozone consumer confidence up next
- US Dollar gains on safe haven flows
- Powell & US Treasury Secretary to testify before Congress
After dropping 0.65% in the previous session, the Euro US Dollar (EUR/USD) exchange rate is extending losses on Tuesday. The pair settled -0.65% at US$1.1769, above the low of US$1.1731. At 08:15 UTC, EUR/USD trades -0.4% at US$1.1724.
The Euro sold off sharply in the previous session and is under pressure again as fears of a second wave of coronavirus and increased lockdown restrictions weigh on sentiment. Whilst yesterday riskier assets across the board sold off, including European stock markets, today, the likes of the German Dax and French CAC are clawing back some of yesterday’s losses. However, the Euro remains firmly out of favour against the safe haven US Dollar.
With new daily cases, particularly in Spain and France soaring, investors are growing nervous that a second national lockdown could be on the cards. Parts of Madrid have already been ordered to stay at home after new covid cases in Spain topped 14,000 on Friday
Investors are awaiting the next catalyst. Attention will now turn to Eurozone consumer confidence data, the preliminary reading for September. Expectations are for the reading to confirm -14.7. This data print is important because a confident consumer often spends more. A weak reading could drag on the Euro.
The US Dollar is surging, adding to yesterday’s strong gains as investors seek out its safe haven properties.
Attention will now turn to Federal Chair Jerome Powell & US Treasury Steven Mnuchin who are due to testify before Congress and the Senate. Both players are expected to add pressure to the House to agree on additional US fiscal stimulus.
The Republicans and Democrats have failed to agree on an additional rescue package since the $600 additional unemployment benefit expired in July. The lack of additional stimulus is adding to the risk off mood ion the market, lifting the US Dollar.
