EURUSD rallied back through 1.10 during yesterday’s trading session and maintains this momentum as we begin Friday’s session. These are the highest levels we have seen for almost ten days.
As the market digests news of $2trillion aid package in the US which looks set to be to be approved today we see a broadly softer USD as risk appetite increases. Having announced their historical aid package in the early hours of Wednesday morning a vote is due today which should see this enacted within the coming days/weeks. Offering much needed business relief, hospital funding and a direct payment of $1200 to US citizens this significant intervention really highlights how unprecedented these times are for the globe.
Are Markets Recovering From Corona Shock?
Now surpassing China with the number of confirmed cases of Covid-19 the US jobless claims data rose to 3.3million last week, an early indication that coronavirus is already impacting the US labour market. Despite the bleak outlook US markets continue to rally this morning with the Dow Jones and S&P 500 up more than six percent. The S&P 500 has now recorded its quickest three-day advance in nine decades, according to Bloomberg News.
The US Federal Reserve reiterated that it would continue to maintain liquidity “aggressively” with Chief Jerome Powell stating that “when it comes to this lending, we’re not going to run out of ammunition.”
The significant support to the US economy from both government and the Federal Reserve continues to soften market fears and means that broadly speaking US stocks are being sold and we could continue to see a return across the riskier asset classes.
Europe Still Slow to React to the Ongoing COVID-19 Outbreak
As Europe still debates how best to action its own aid package in the face of the current pandemic the bloc is struggling to maintain a united front. With difference of opinions between countries on how best to offer support coronavirus continues to impact Northern Italy and Spain – both on full lockdown. As this filters through to exchange rates a softening of the Euro could well bring welcome relief to the strained economy as recent strength has outpriced European goods from an already challenging marketplace.
Criticism of the European Centrals Bank tepid response to the crisis continues to mount which could prompt deeper measures of support to be announced by Christine Lagarde in the coming days, this could see a further impact in the value of the Euro versus both the US Dollar and the Pound, expect continued volatility in the market.
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