The star performer across currency markets on Tuesday was the euro. It’s started the month of December in fine form, breaking through strong resistance at $1.20 against the US dollar and gained handsomely against the pound too.
Reasons for the euro’s impressive advance include widespread USD weakness, positive risk sentiment across broader financial markets, better than expected eurozone data, easing up of infection rate across key parts of continental Europe, and lastly, the technical breakout from the $1.20 level which saw a sharp rise of 0.60% within a few hours.
Nevertheless, the shared currency will face hurdles in the short-term, notably the prospect of another round of stimulus support from the European Central Bank, which may even include lowering interest rates further into negative territory. The lack of inflationary pressure across the eurozone will also remain a headwind, this is a theme which has plagued the region for many a year and looks like it will continue to.
On the economic calendar today we have more testimony from the Fed chairman and the outgoing Treasury Secretary, Steve Mnuchin. There will also be a number of central bank speakers from across the globe including the UK, eurozone, and US.
8:14am, December 2nd 2020
The details expressed in this market report are for information purposes only and are not intended as a solicitation for funds or a recommendation to trade. Cornhill International Payments limited accepts no liability whatsoever for any loss or damages suffered through any act or omission taken as a result of reading or interpreting any of the above information.