- Euro (EUR) advances for 4th straight day
- Vaccine optimism supports risk sentiment
- US Dollar (USD) slips as US lockdown restrictions tighten
- US retail sales in focus, solid 0.5% increase expected
The Euro US Dollar (EUR/USD) exchange rate is advancing on Tuesday for a fourth straight day. The pair settled 0.07% higher in the previous session at US$1.1853, towards the upper end of the daily traded range. At 07:15 UTC, EUR/USD trades +0.15% at US$1.1870.
The Euro has been lifted by risk on trading following the announcement by Moderna that its covid-19 vaccine candidate is 94.5% effective. This is even more effective that Pfizer’s vaccine which was found to be 90% effective. The Moderna vaccine also benefits from the fact that it can be stored at warmer temperatures meaning that distribution will be easier.
With 2 viable vaccines announced over the past week risk appetite has increased, boosting demand for risker assets such as stocks whilst dragging on demand for the safe haven US Dollar.
However, the upbeat mood is starting to ease and after a stellar session on Monday, European stocks are heading lower on Tuesday. Whilst there is light at the end of the covid tunnel, covid cases are still very much on the rise.
In the US covid cases are surging too and states are tightening lockdown restrictions once again. Michigan, California and Washington are the latest US states to bring in stricter measures to stem the spread of covid as US cases top 11 million. Fears are growing that the fragile economic recovery will be derailed.
US retail sales data will be in focus later today. Expectations are for sales to rise a respectable 0.5% month on month in October, after a surprise surge of 1.7% in September. The data is expected to show a moderation in retail sales after a strong September, but US consumers continue to spend well, almost shrugging off business closures and tighter restrictions as the country enters its 9th month of dealing with the virus.
Federal Reserve Chair Jerome Powell is also due to speak later today and could hint at further easing.