- Euro (EUR) moves lower as risks mount
- Italian PM Giuseppe Conte to resign
- US Dollar (USD) rises in risk off trade over stimulus doubts
- FOMC rate decision tomorrow
The Euro US Dollar (EUR/USD) exchange rate is edging lower, extending losses for a second straight session. The pair settled -0.2% on Monday at US$1.2137, after picking up from US$1.2116, the low of the day. At 09:15 UTC, EUR/USD trades -0.05% at US$1.2133.
The Euro came under pressure in the previous session after weaker than expected German business confidence data. The German IFO survey revealed that both futures business expectations and assessment of the current situation deteriorated by more than analysts had forecast. Rising coronavirus cases and tighter restrictions hit sentiment. Companies become more pessimistic about the outlook for the coming six months.
In Italy, Prime Minister Giuseppe Conte is expected to resign over his handling of the covid pandemic. In a tactical move Mr Conte hopes to be given a mandate by the President to for a stronger government.
Looking ahead there is no high impacting Eurozone data due to be released today. Investors will focus on covid news and vaccine developments particularly amid concerns that there is as shortage of vaccines in Europe as Germany questions the effectiveness of the AstraZeneca vaccine in people over 65.
The US Dollar is trading on the front foot as concerns over the timing and the size of the US covid stimulus package dragged on sentiment.
Doubts are starting to emerge over Biden’s ability to push his $1.9 trillion covid stimulus bill through Congress as some Republicans raise concerns over the size of the bill.
Meanwhile, US covid cases continue to surge and economic data is pointing to a slower pace of recovery.
Looking ahead attention will turn to the Federal Reserve monetary policy announcement due on Wednesday. The Fed are not expected to adjust monetary policy. Instead, investors will be looking for further commentary over the outlook for the US economy.