- Euro (EUR) bounds higher targeting $1.2150
- German exports remain strong +0.8%, albeit weaker than forecast
- US Dollar (USD) drops on safe haven outflows
- Vaccine optimism & fiscal stimulus hopes boost market mood
The Euro US Dollar (EUR/USD) exchange rate is bounding higher on Wednesday snapping a three-day losing streak. The pair settled -0.05% lower on Tuesday at US$1.2101 towards the low of the day. At 08:15 UTC, EUR/USD trades +0.2% at US$1.2125, easing back from a daily high of US$1.2147.
Data revealed that German exports inched higher in October by a less than expected 0.8% month on month after surging 2.3% in September. Solid export data could help the Eurozone’s largest economy avoid a double dip recession in Q4.
The data comes following mixed data in the previous session. On the one hand, the Eurozone third quarter GDP was downwardly revised to 12.5%. However, German ZEW forward looking economic sentiment gauge jumped sharply higher. Investors consider that the coming covid vaccine will improve the economic outlook for the Eurozone’s largest economy.
The US Dollar is edging lower as risk sentiment surges amid vaccine optimism and hopes for additional US stimulus. US equity markets hit fresh record highs in the previous session and US futures are pointing to a stronger start again today as investors buy into riskier assets such as stocks whilst selling out of the safe haven US Dollar.
The number of covid cases in the US passed 15.1 million. However, expectations are for one if not two covid vaccines to be approved for emergency use in the coming weeks has lifted sentiment. A vaccine is the quickest way to return to pre-pandemic growth levels.
Adding to the upbeat mood the Democrats and Republicans appear to be moving closer to agreeing additional fiscal stimulus for the US, potentially before Christmas. Treasury Secretary Steven Mnuchin has presented a fresh $916 billion relief package to House Speaker Nancy Pelosi.