European nations nations  resorting  to drastic measures to curb COVID-19 infections

The euro has been battered by the risk of COVID-19 and nations resorting to increasingly drastic measures to curb infections in recent days.

Hourly chart

While restrictions are less stringent than in Germany or France, Spanish lawmakers have approved a six-month extension of a state of emergency,

Regional authorities now have the power to limit freedom of movement through lockdowns and curfews.

Catalonia, for instance, has just banned travel in and out of its region for 15 days.

Bars and restaurants are shut down, which has angered workers in the sector.

In France, Emmanuel Macron said on Wednesday as he addressed the nation, that under the new measures, starting on Friday, people would only be allowed to leave home for essential work or medical reasons.

In Germany, the government’s second “soft” lockdown came into force on Monday where bars, restaurants, theatres, swimming pools and fitness studios will close until the end of November, and public gatherings will be limited to two households or up to 10 people.

UK to move to Tier 2 before Christmas

Meanwhile, the latest weekly surveillance report from Public Health England shows that Covid-19 case rates in England are rising for all age groups except 10 to 19 year-olds.

Government scientific adviser Dr Mike Tildesley has said more national restrictions are needed, with the current trajectory likely to put nearly everywhere in Tier 2 before Christmas.

This is the second-highest alert level where there are no restrictions on travel or use of transport but people should work from home where possible.

People can still see from different households both indoors and outdoors, but only in groups of up to 6 people.

The University of Warwick researcher, who sits on the Scientific Pandemic Influenza Group on Modelling, told BBC Radio 4’s Today programme:

“We are seeing the R number is greater than one everywhere. And, in a sense, some kind of national lockdown, a circuit-breaker or something along those lines, would actually have more effect in those parts of the country that have not yet progressed into Tier 2.”

“R is greater than one everywhere and if we don’t take urgent action, we’re most likely to see that as we’re approaching the festive period, we’re probably going to be at least in Tier 2 pretty much everywhere in the country.”

“So really we need to move away from these regional firefighting techniques to try to move to something more national.”

In other related news, Russia has temporarily paused the vaccination of new volunteers in its covid-19 vaccine trial, with clinics citing high demand and a shortage of doses.

Market implications

The US dollar has come out on top as risk-off flows and better US economic data has put wind into its sails. 

However, the euro has been priming for selling-off for some time and positioning had been heavily long for a number of weeks. 

The European Central Bank was an additional weight that came through on Wednesday to tip the currency over the edge and Thursday’s rally in the greenback was the straw that broke the camel’s back. 

A 38.2% Fibonacci retracement of the 4-months of consecutive gans comes in at 1.1485.