The euro US dollar exchange rate is extending losses for a third straight session. The pair settled just a few pips lower in the previous session at US$1.2157 after declining to a fresh six-week low of $1.2112. At 08:15 UTC, EUR/USD trades -0.2%% at €1.1225, explains Fiona Cincotta of Currency Live.
The minutes from the latest European Central Bank meeting revealed that policy makers were firmly behind the decision to extend and increase the central banks’ policy accommodation until March 2022. The minutes also showed that policymakers were concerned over the exchange rate and the lackluster inflation levels in the block.
Covid cases remain a concern for euro investors. Holland announced that it will extend its lockdown measures. Germany could do the same. Germany recorded a new record number of deaths from Covid and Chancellor Angela Merkel is calling for tighter restrictions, particularly given that the German economy escaped relatively unscathed.
German GDP showed that the economy contracted a better-than-feared -5% in 2020 thanks to huge stimuls packages. Its worth noting that the German economy contracted -5.7% in the 2009 financial crisis.
A decision will be taken next week over whether lockdown restrictions in the Eurozone’s largest economy will be extended again.
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The US dollar slipped lower before rebounding following comment from the Federal Reserve Chair Jerome Powell. There has been a fair amount of speculation over the past week that the Fed could look to taper its bond-buying programme, particularly in light of the huge stimulus package announced by the Joe Biden administration.
However, Chair Powell said that now was not the time to be considering the Fed’s exit. His comments came shortly after initial US jobless claims shot higher to 965,000. This was the highest level in five months as US businesses continue to struggle under the strain of rising Covid cases.
Today's attention turns to US retail sales, which was released earlier today.
To learn more about Fiona Cincotta, please visit CurrencyLive.com.