A theme that has almost been forgotten about as we move further into the final quarter of 2020 is that of the euro’s strength and resilience since the pandemic spread across the western world. The EURUSD pair saw a move of over 13.5 cents, taking it from $1.0650 in March, up to $1.20 in August. This is a monumental move by any standard, however, can the single currency continue its run?
Looking at the evidence, there’s more reason to think that it encounters a tough time from here. 4 reasons stand out: the virus is once again raging across Europe, with both France and Spain the main hotspots. The increased prospect for a double-dip recession; after a bounce in the 3rd quarter, the economic data is beginning to take a turn for the worse. Further easing from the European Central Bank is to be expected. Lastly, US election risk or a turn in financial market sentiment could push investors into the safety of the US dollar. If you’re a business or an individual exposed to the euro, and would like to discuss how to be positioned for the remainder of 2020, please feel free to speak to one of our experienced FX dealers.
Today’s economic calendar sees a raft of UK releases including monthly GDP numbers, trade balance, manufacturing/industrial production as well as services index data. At lunchtime, we’ll monitor the Canadian September employment report. Brexit negotiation headlines should also be expected throughout the day.
Have a good weekend.
8:12am, October 9th 2020
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