New coronavirus-related restrictions in the old continent are taking their toll on the old continent’s economies while US fiscal stimulus talks are stalled, with even the optimists seeming to give up. What’s more, expectations from US jobless claims look elevated, opening the door to the risk-off response. These are the reasons to favor a fall in EUR/USD, Yohay Elam, an Analyst at FXStreet, reports.
Key quotes
“France announced a nighttime curfew in Paris and several other large metropolitan areas to combat the rapid spread of coronavirus in the eurozone’s second-largest economy. Germany, the continent’s economic ‘locomotive’ is considering imposing limitations if the situation fails to improve. The country has reported the largest number of cases since April. Spain, The Netherlands and Belgium had been struggling for long weeks. Christine Lagarde, President of the European Central Bank, is set to speak later in the day and may reiterate her institution’s pledge for accommodative policy – potentially further weighing on the euro.”
“While US Treasury Secretay Steven Mnuchin is following President Donald Trump’s wishes to strike a deal, he seems to be running out of time. Senate Republicans – who are skeptical about government aid – are focused on nominating Amy Coney Barret to the Supreme Court. They may lose the Senate in the elections. House Democrats are reluctant to compromise and give Trump a political win ahead of the vote. Without another relief package, markets could retreat and the safe-haven dollar may catch a bid.”
“COVID-19 cases are moving up also in the US. Without government support, the recovery is already showing signs of a slowdown – and that may happen again with Thursday’s weekly Unemployment Claims. After dropping from the millions to under 900,000, new applications seemed to have hit a wall lately. If the labor market stops improving, the greenback could receive more flight-to-safety flows.”
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