The common currency has been giving some ground as stocks retreated and the dollar clawed back some of its losses but that seems limited, according to FXStreet’s analyst Yohay Elam who is eyeing uncertainty about EU fiscal stimulus and US COVID-19 statistics.
Key quotes
“US COVID-19 figures coming out of various US states showed that infections topped 10,000 in both California and Texas, with the latter struggling to manage its overwhelmed hospitals. While cases in Florida remained below 10K, the positive test rate is at a worrying 16%. Overall, the US has over three million confirmed cases and around 131,000 mortalities – and the death curve has stopped flattening.”
“The White House is mulling destabilizing the Hong Kong Dollar peg as several policymakers wish to punish China for tightening its grip on the city-state. However, breaking the peg is a considerable undertaking – around $5 trillion are parked in HK. Moreover, the Hong Kong Monetary Authority (HKMA) has the backing of China’s central bank if it needs support with swap lines. Investors seem to shrug off the threats, but the president may feel urged to act ahead of the elections.”
“The focus shifts to the EU Summit – the first post-pandemic face-to-face encounter – with the proposed EU Fund topping the agenda. The ‘Frugal Four’ – Austria, the Netherlands, Denmark, and Sweden – have reservations about the plan. The European Commission’s program, backed by Germany and France, includes grants worth €500 billion, funded mutually. The four rich countries prefer loans. Investors expect a compromise, but further feet-dragging may weigh on the common currency.”
Share
