- Euro (EUR) trades lower as fears remain over new covid strain
- Gfk German consumer confidence -7.3 vs -6.8
- US Dollar (USD) rises on risk off trading despite Congress passing huge spending bill
- US GDP Q3 final estimate expected to show 33% growth YoY
The Euro US Dollar (EUR/USD) exchange rate is declining on Tuesday paring gains from the previous session. The pair experienced high levels of volatility in the previous session, trading a range of 130 pips before settling towards the upper end of the daily traded range +0.2% at US$1.2242. At 07:15 UTC, EUR/USD trades -0.1% at US$1.2227.
The risk off mood continues on Tuesday amid concerns over the new strain of covid that is surging across the UK and which led to an emergency meeting of EU authorities.
The new strain appears much more contagious, although so far it is not showing signs of being more deadly. Investors fear that the new strain could slow the global economic recovery.
Stronger than expected German GFK consumer confidence data has failed to lift the common currency. Consumer sentiment in the Eurozone’s largest economy slipped by less than expected for January printing at -7.3, down from -6.8 in December. This was the lowest reading since July however it was noticeably better than the -9.5 that was forecast.
The US Dollar eased back from session highs on Monday to end the session lower after the US Congress agreed to $900 billion covid rescue package alongside at $1.4 trillion dollar government spending deal.
This giant spending package comes as recent data showed that the US labour market recovery is stalling and could help the US avoid a double dip recession.
Even so, that hasn’t been enough to distract investors from covid concerns. Today, safe haven flows are once again lifting the US Dollar. The risk off mood was also evident in US futures market with S&P pointing to a lower start.
Looking ahead the US GDP Q3 final reading is due later in the US session. Expectations are for 33% YoY growth in the third quarter.