FX Risk Rally Continues As Stimulus Prospects Grow

EUR/USD rose for the sixth day in a row. Even though new virus cases in Germany are stubbornly high and new restrictions just went into place, data from the region has been much better than expected. Improvements in PMIs are expected to carry over to Friday’s German IFO report. The current conditions component may decline but the expectations component should rise on vaccine optimism. If it doesn’t and both decline, it could trigger a correction in EUR/USD.

The strongest moves were in the New Zealand and Australian dollars which benefitted from stronger data. In New Zealand, the economy expanded by 14% in the third quarter after contracting by an upwardly revised -11% in Q2. In Australia, 90K jobs were created last month, surpassing the 50K forecast. The unemployment rate also dropped to 6.8% from 7%. Both of these improvements were anticipated as NZ was one of the first countries to reopen and Australia eased restrictions. The Canadian dollar on the other hand trailed behind with relatively modest gains. Despite a rise in oil prices, the currency’s rally is losing steam after the central bank governor said the economy is entering a difficult stage as the second virus wave raises the risk of a temporary contraction. New Zealand trade numbers are due for release this evening followed by Canadian retail sales Friday morning -stronger numbers are expected all around.

1 2
View single page >> |
How did you like this article? Let us know so we can better customize your reading experience.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.