With the Euro trading just over 1.08 verses the US dollar this morning, after a flat start to the week the EURUSD pair remain towards some of its lowest levels available since April 2017.
There has been a strong start to European equity markets this morning, and this is due to the slowdown in the number of fatalities due to the Corvid-19 virus in countries such as Spain and Italy who have been the worst hit countries in the region so far. The US is now the epicentre for the virus with New York being the worst hit area. Economic data releases are showing a dramatic slowdown in the global economy, although much of this data has been priced into both equity and currency markets although I think there could be further market movements if the problem is ongoing and therefore the timeframe for self-quarantine is extended.
Why is the Euro so Low Against the US Dollar?
The lowest point for EURUSD came over the past when the pair hit 1.0636 so there has been over a 1.5 cent recovery so far. Due to the US Dollars status as a safe haven currency it has strengthened in line with the markets increased expectations of a global slowdown. With around 90% of global GDP now being affected by the Corvid-19 pandemic it’s not a surprise to see the dollar strengthen in such a fashion.
FOMC Minutes to Provide Insight into US Fed’s Economic Plans
Perhaps the key release out of the US this week will be the FOMC minutes which will begin around 6pm UK time on Wednesday. This will provide the Federal Reserve Bank in the US the opportunity to comment on US monetary policy and interest rates so it could provide the markets with some insight into the Fed’s plans. On Friday there will also be Inflation data releases around 12.30pm UK time and these releases carry the potential for market movements if the figures released deviate from the market expectations so feel free to register your interest if you wish to be kept updated.
Data releases out of the Eurozone are light this week. Perhaps the key release will be on Wednesday when ECB Monetary Policy Meeting Accounts will take place but aside from this market movement is likely to be driven by updates on the Covid-19 spread.
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