- Euro (EUR) advances towards 1.23
- German retail sales unexpectedly rise in November
- US Dollar (USD) slides lower ahead of Georgia senate election
- US ISM Manufacturing data in focus
The Euro US Dollar (EUR/USD) exchange rate is edging higher on Tuesday after a flat finish in the previous session. The pair settled on Monday just 10 pips lower at US$1.2248. At 09:15 UTC, EUR/USD trades +0.25% at US$1.2278.
The Euro has remained resilient in recent sessions despite rising covid cases and tighter lockdown restrictions across many European countries. The common currency’s resilience is in part thanks to a weaker US Dollar and encouraging data points.
German retail sales were surprisingly buoyant during November. According to the Statistics Office German retail sales rose 1.9% in November ahead of analysts’ expectations of a 2% contraction thanks to strong growth in online spending and increased spending on home improvements.
Germany was in partial lockdown in November although shops were still open. Most shops were forced to close mid- December when restrictions were tightened further to stem the spread of covid so a weaker number could be expected in December.
The strong figure comes following yesterday’s upbeat manufacturing PMI numbers. The data revealed that the manufacturing sector, particularly in Germany ended 2020 on a strong note with activity at the highest level in 2.5 years.
Today the focus is firmly on the US Georgia Senate Runoff elections, which will determine the composition of the US Senate will be known. There are two seats up for grabs. A blue Democratic sweep would result in a 50 – 50 tie in the Senate with the tie breaking vote going to Vice President Kamala Harris. This would pave an easier path for Joe Biden to push through further fiscal stimulus adding further pressure on the US Dollar.
However, it is more likely that the Republicans will retain control of the Senate hurting the prospect of further stimulus.
On the economic calendar US ISM manufacturing PMI is expected to show solid expansion of 56.6. The employment component is also expected to tick higher.