- Euro (EUR) just holds gains as concerns linger of economic recovery in the region
- Double dip recession could be on the cards
- US Dollar (USD) eases on hopes of a rescue package agreement between Republicans & Democrats
- US durable goods only high impacting data point
The Euro US Dollar (EUR/USD) exchange rate is just about clinging to gains for a second session on Friday, adding to gains from the previous session. The pair settled on Thursday +0.1% at US$1.1672, close to the high of US$1.1688. At 07:15 UTC, EUR/USD trades just a few pips higher at US$1.1674. The pair is on track for -1.4% losses across the week.
The Euro is struggling to hang onto gains as the picture in region is deteriorating. Coronavirus numbers are on the rise and threaten to derail the fragile economic recovery. Data earlier in the week revealed that the economic recovery in the eurozone is on very shaky ground. Activity in the service sector is already back in contraction.
As covid-19 cases continue to rise and quickly in the region, further tightening restrictions to stem the spread of the virus are almost certain over the coming weeks. This means that the chances of a double dip recession are rising.
There is no high impacting Eurozone data today. This means that sentiment will drive the common currency.
The US Dollar is seen pulling back versus its major peers on Friday on growing optimism that US lawmakers will agree to a fiscal stimulus package to support the stalling US economic recovery. Risk aversion has lifted the US Dollar across the week on fears that further stimulus wouldn’t be agreed with the US Presidential elections so close. However, reports that stalled stimulus talks between the US Democrats and Republicans showed signs of progress has increased hopes of a deal.
US lawmakers are working on a $2.2 trillion coronavirus stimulus package which could be voted on a soon as next week.
The renewed hopes of a deal come after the latest US jobless claims data showed that initial jobless claims reached 870,000 last week, this was above the 860,000 the week before and indicates that the recovery in the labour market is stalling.
Durable goods data the only high impacting US data release on an otherwise quiet economic calendar.