- Euro (EUR) under pressure, German industrial production 0% vs 0.3% exp.
- Christine Lagarde to speak later
- US Dollar (USD) rises on stimulus optimism
- US NFP data disappointed underlining need for stimulus
The Euro US Dollar (EUR/USD) exchange rate is slipping lower at the start of the new week adding to a steep selloff across the previous week.
Whilst the pair settled +0.7% at US$1.2042 on Friday, this was insufficient to prevent losses across the week. The pair lost -0.7% across the week in its second straight week of losses and after it struck at multi -month low.
At 09:15 UTC, EUR/USD trades -0.1% at US$1. 2033 as it continues to trade around multi-month lows.
The Euro has been under pressure versus the US Dollar owing in part to its slow vaccination programme.
The Eurozone has been comparatively slow approving and deploying the covid vaccine with just 3.5% of Germans vaccinated and 2.8% of France’s population vaccinated. Fears are growing that the slow vaccine rollout will mean the economic recovery in the region will take longer. Weaker than forecast German industrial production figures did little to support the common currency.
This week is a quiet week on the Eurozone economic calendar. A speech by European Central Bank Governor Christine Lagarde could drive the Euro, in addition to sentiment.
The US Dollar is on the rise as US treasury yields rise on additional stimulus optimism.
The greenback lost ground on Friday following the US non far payroll data. The US economy added 49,000 jobs in January, this was roughly in line with estimates of 50,000. However, leading indicators across the week such as the ADP private payroll report and jobless claims had pointed to a stronger reading, which was priced in. This meant that the inline reading was actually a disappointment to the market. However, this is also expected to be a low point. With vaccinations ramping up, covid hospitalisations falling job figures from the second quarter onwards are expected to be much stronger.
Interesting unemployment fell from 6.7% to 6.3% which was a significant improvement.
Attention this week will be firmly on Joe Biden’s $1.9 trillion covid stimulus package. On Friday the US Senate passed a budget resolution that allows for the passage of the fiscal stimulus package in the coming weeks without Republican support.