- Euro (EUR) rises after AstraZeneca reveals vaccine is 70% effective with 1 does
- Eurozone PMI showed business activity contracted in November
- US Dollar (USD) drops on safe haven outflows
- US manufacturing & services PMI in focus
The Euro US Dollar (EUR/USD) exchange rate is advancing on Monday adding to gains from the previous week. The pair gained 0.2% across the previous week, settling on Friday at US$1.1853, approximately in the middle of the weekly traded range. At 09:15 UTC, EUR/USD trades +0.2% at US$1.1880.
Risk on trade is boosting the Euro despite disappointing PMI data. The mood is the market is upbeat amid more vaccine developments. AstraZeneca announced that its vaccine candidate developed with the University of Oxford is around 70% effective. Whilst this is an excellent result, coming after Moderna and Pfizer claiming 95% effectiveness has taken the shine off the announcement. Even so, the AstraZeneca jab is far cheaper and easier to store than the other two. The news boosted risk sentiment as the light at the end of the covid tunnel gets brighter.
Rising risk sentiment overshadowed the disappointing PMI data from the region. Economic activity in the Eurozone contracted once again in November after government’s in the region introduced new lockdown restrictions in a bid to curb the spread of resurgent covid.
The flash Eurozone Composite PMI which considers activity in both manufacturing and services came in at 45.1, down from 45.8 in November. This was the lowest reading in 6 months, down from 50 in October. The level 50 separates expansion from contraction.
As risk sentiment rises demand for the safe haven US Dollar has declined, putting the greenback under pressure. Adding to the upbeat news the US Food and Drug Administration could grant approval to the Pfizer vaccine as son as mid-December, with people in the US starting to receive the shot the day after.
The news comes the week of Thanksgiving when millions of Americans are expected to travel visiting friends and family. Covid cases will almost certainly surge.
Looking ahead US manufacturing & services PMI data will be in focus.