- Euro (EUR) rises despite ECB not revising projections on vaccine news
- Eurozone CPI in focus, 0.1% increase MoM expected
- US Dollar (USD) falls after weak US retail sales on Tuesday unnerved investors
- US housing starts & permits in focus
The Euro US Dollar (EUR/USD) exchange rate is extending gains on Wednesday for a fifth consecutive day. The pair settled +0.07% higher on Tuesday at US$1.1861 approximately in the middle of the daily traded range. At 09:15 UTC, EUR/USD trades 0.2% at US$1.1880, slightly off the high of the day of US$1.1894.
The Euro is pushing slowly higher as investors contend with the two coronavirus narratives. Firstly, vaccine optimism and secondly rising covid cases along with tightening lockdown restrictions. Covid cases in France hit a record 2 million.
European Central Bank President Christine Lagarde said that the vaccine news will not prompt the ECB to upwardly revise its forecasts dampening spirits slightly. The central bank is widely expected to ease monetary policy when it meets in December
Attention will now turn to Eurozone consumer price inflation data. Analysts are expecting CPI +0.1% MoM in October, in line with September.
The US Dollar is under pressure on Wednesday dragged lower by signs that the covid pandemic is once again hitting the US consumer, whilst the political picture remains divided.
UUS retail sales rose just 0.3% versus 0.5% expected in October compared to the previous month. This was well below the 1.6% month on month increase seen in September and served as a stark reminder that if it was needed that there could well be a lot of economic fallout from the pandemic over the coming months before any vaccine is widely available.
The fact that the US congress is still failing to agree on an additional fiscal stimulus package is a further drag on the US economy and the US Dollar.
Looking ahead there is no high impacting US data. However, investors could look to mid-tier housing starts and permits for further clues.