The Euro to US Dollar exchange rates have been anything other than consistent of late as the effects of the Coronavirus continue to burden the currency markets. Last month we saw mid-market levels at a peak of 1.14 down to 1.06 within a few days whilst currently at the 1.08 marker for today’s trading. Despite the significant swings in rates, the overall trend is of Euro weakness as the rate has been diminishing recently. This is not to say however, that the USD is strengthening. With Unemployment claims coming in at the unprecedented levels of 6.6 million last week with estimations saying that overall unemployment could reach as high at 15% there is likely to be a continuing weakening of the USD throughout April. Considering that average unemployment usually lies around 3.5%, having experts predicting more than quadrupling this number could have serious implications for the world’s largest economy.
In comparison to this from the Eurozone perspective, Spain despite its significantly smaller population, received over 800k job losses recently as one of the worst hit countries with 142k cases and over 14k deaths. In many ways, it is very difficult to suggest which countries are faring better than others with some many record-breaking data releases. That being said, in regards to new virus cases, Spain and Italy have plateaued in their new virus cases as the number of new infections has been reducing for the last few 4 days whilst the US is looking to become the next epicentre for the virus with roughly 30k new cases daily in comparison to Spain’s 4000 and Italy’s 3000.
In further shocks for the USD, financial strategists were predicting the US Non-farm payroll to be coming in at -100k jobs last week. Yet, the actual figure was -701k which suggests not only that this will be a huge blow to the US economy down the line, but also that the markets still haven’t fully anticipated the full extent of the impacts that COVID-19 is creating globally.
Many data releases come out at the latter half of this week with the FOMC Minutes out later today and revised Initial Jobless claims, April Consumer Sentiment Index and OPEC Minutes all out tomorrow. This could provide some more volatility should more light be shone on the extent of the economic impacts rapidly shaping the outlook for the remainder of 2020. For Europe, all that will be out to potentially cause market movement will be the European Central Bank Monetary Policy meeting which provides an account of the financial market and other important developments whilst giving a stance on the monetary policy strategy. Any developments that suggest a worsening in the state of these countries affairs from these data releases is likely to cause further volatility into the future.
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