Pound At 3 Week Low vs. Euro Following Dip in UK Retail Sales
  • Euro (EUR) under pressure amid slow vaccine rollout
  • EZ retail sales expected to rise 1.6% MoM in December
  • US Dollar (USD) rallies across the board as US Treasury yields rise
  • US initial jobless claims in focus

The Euro US Dollar (EUR/USD) exchange rate is extending losses for a fourth straight session. The pair settled -0.1% on Wednesday at US$1.2034 after declining to a low of US$1.20. At 08:35 UTC, EUR/USD trades -0.25% at US$1.2004 after declining to a multi month low of US$1.1994.

Demand for the Euro remains weak amid continued concerns over the slow ramping up of the covid vaccination programme in the Eurozone. As the vaccine efforts continue to disappoint in the region there are growing concerns that the Eurozone is not only heading for a double dip recession, but that economic weakness could spread into the second quarter of this year as well.

Earlier in the week Eurozone GDP revealed -0.7% contraction in the final three months of 2020. The region also experienced a contraction in the first half of 2020.

On the economic calendar Eurozone retail sales for December are in focus. Analysts expect a 1.6% month on month rise in sales after sales plunged -6.1% in November.

The US Dollar is trading higher across the board on Thursday, boosted by rising US Treasury yields as the outlook for the US economy improves.

Sentiment surrounding the US Dollar has been on the rise recently aided by the prospect of huge fiscal stimulus under the Joe Biden Administration and owing to the vaccination drive and improving economic data.

Yesterday US ADP payroll data revealed that the private sector added 174,000 new jobs in January after shedding 123,000 in December. Analysts had been expecting 49,000 jobs to have been added.

Today attention will be on the release of US jobless claims ahead of Friday’s all important non-farm payroll data. Analysts are expecting the number of Americans signing up for unemployment benefits to fall marginally to 830,000, down from 847,000 last week.