The Eurozone reports a resurgence of Covid-19 cases. Investors fear that lockdowns will resume again in the region, affecting the EUR/USD.
Brexit talks are facing trouble with sticking points bringing in disagreements. Fishing access is one such sticking point that is delaying the deal. Many organizations have advised the UK government to bridge differences, saying the deal will help in post-Covid recovery which is currently essential. Economic uplift is necessary for the Eurozone and in the United Kingdom, which are worst affected by Covid-19.
Manufacturing PMI in Japan and Australia data are to be released on Thursday 22, Oct. Manufacturing PMI in the UK, Germany, France, and the United States are expected on Friday.
US Unemployment Claims are expected on Thursday. Expert s expect claims to come down when compared to the previous data.
Consumer confidence data in the Eurozone and the United Kingdom will show the consumer situation in that region.
EUR/USD
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EUR/USD Currency Pair Affected by the Corona Virus
The Eurozone, which was moving ahead strongly is deeply affected by the second wave of coronavirus cases. It will hit the economic recovery, and affect the euro, feel experts. The third-quarter data GDP is expected this week.
The EUR/USD closed at 1.1718 on Friday, 16 Oct. The euro to dollar currency pair was showing strength in the first week of October, but with the rising coronavirus cases, the currency pair is losing strength. Investors prefer the dollar, which is strengthening the currency.
International Monetary Fund on Covid-19
The World Bank Group (WGB) and the International Monetary Fund (IMF) have united to fight the problems related to the pandemic, such as addressing poverty-ridden issues and usher in shared prosperity for better development of all sectors of a country.
The pandemic has brought an economic contraction in every country. Inequalities have widened while global poverty rates have increased. Children are unable to attend school, and job losses have increased, while food and medical supply are hit. The Covid-19 pandemic has caused a global crisis in which the most vulnerable sections of society face difficult times.
US Dollar
The US Dollar is a Safe-Haven Investment
With coronavirus cases increasing in Britain and Europe, the greenback is at a two-week high against other major currencies. It reached 93.90 levels on Thursday but lowered slightly on Friday.
In the US, new cases keep surging in the Midwest. The stimulus package is yet to materialize in the US, as negotiations are bogged down in the White House. Economic recovery is possible only if a stimulus is passed in the United States. The greenback is gaining strength as a safe-haven investment. Meanwhile, opinion polls predict a clean sweep by Democrats. If it happens, a big stimulus package can be expected.
The US Dollar Index has increased by 0.8% last week against major currencies. It is the largest weekly increase since September. The US Dollar Index has moved towards a higher level of its range. The dollar has not fallen significantly, though negative news has been doing its rounds. The US 30-year mortgage rate has fallen to an all-time low to 2.81%.
The US Dollar Index closed at 93.72 for the weekend. It is at levels last seen in the first week of October in the first week of October.
EUR/GBP
The United Kingdom faces Lockdown Restrictions
Nightlife in Britain is restricted due to the Covid-19 lockdown. Lockdown measures have been imposed in the United Kingdom, which has affected the EUR/USD currency pair.
The trade deal is hit by obstacles that evade a trade deal drawn between the EU and Britain. It was optimism about the trade deal that lifted the GBP/USD currency pair in the first half of October. But with uncertainty setting in, the Sterling is on a downtrend. The British Pound to the US Dollar Index has faced stiff resistance at the 1.30 levels. A deal will bring up the currency pair. If the deal agreement is drawn, it will help the economy deal with the Covid-19 situation better.
The EUR/GBP closed at 0.9071 on Friday, 16 Oct. The pair has refused to move below the critical 0.90 levels, where a strong supportive base is formed.
Asian Markets
The kiwi and Australian dollar have been the worst hit as they are risk-sensitive currencies, which fluctuate with the economic conditions and the movement of the US Dollar. Monetary policy minutes from the Reserve Bank of Australia are to be released this week.
The Japanese yen continues to move downwards. There is much volatility in the Dollar to Yen currency pair, as it closed at 105.40 on Friday. Investors expect the USD/JPY pair to move further downwards, as a bearish trend is seen on the candlestick chart.
The resilient Chinese Yuan is supported by the optimism of Joe Biden winning the presidency. China expects better relations with the United States if Biden wins. The USD/CHF currency pair is showing strength at 0.9146 levels at which it closed on 16 Oct for the weekend. Economic conditions have improved greatly and the GDP data is expected to be good.
