EUR/USD Exchange Rate Rises as US Jobless Claims Soar
The Euro to US Dollar (EUR/USD) exchange rate rose by 0.6% after the US Initial Jobless Claims soared to a worse-than-expected 6.6 million despite lower estimates. This laid bare the coronavirus’ negative impact on the American economy. The pairing is currently trading around $1.093.
The claims number over the last three weeks suggest the unemployment rate is RIGHT NOW at about 14%, higher than the 10% peak of the Great Recession. The key imperative now is getting cash to businesses and individuals FAST and the pace of rehiring after this is all over.
— Ben White (@morningmoneyben) April 9, 2020
The US Dollar (USD) also suffered after the US Federal Reserve announced new lending plans with $2.3 trillion dollars being provided to support the American economy.
Jerome Powell, the Chairman of the Federal Reserve, said that the bank is attempting to ‘provide as much relief and stability as we can’.
The ‘Greenback’ has also suffered from a sell-off as investors favour riskier assets after news of Europe’s steady decrease of coronavirus cases, particularly in hotspots like Spain and Italy.
Silvio Brusaferro, the Head of Italy’s Istituto Superiore di Sanita, commented:
‘The curve has reached a plateau and begun to descend. It is a result that we have to achieve day after day. If this is confirmed, we need to start thinking about the second phase and keep down the spread of this disease.’
The Euro (EUR) Edges Higher as German Exports Grow in February
The Euro (EUR) benefited from stronger-than-expected German export figure for February, with the German trade balance figure rising from €18.7 billion to €21.6 billion.
However, Germany’s trade with China slowed sharply as Europe’s largest economy felt the early impact from the coronavirus.
However, the Eurozone has failed to concede on a joint-debt programme to help ease the coronavirus’ negative impact on the economy.
The ‘coronabond’ scheme, suggested by Italy, Spain and France, was effectively rejected by northern European states like Germany, Austria and Netherlands.
Yohay Elam, an Analyst at FXStreet, comments:
‘Finance ministers from the eurozone countries meet again and will try to hammer out a joint response to the coronavirus crisis. Another inconclusive meeting would weigh on the common currency. Some kind of ‘euro-fudge’ is on the cards.’
Euro (EUR) traders are becoming increasingly concerned about cohesion with the Eurozone as a north-south divide over a coronavirus rescue plan continues to plague European markets.
EUR/USD Forecast: Could the Single Currency Sink Over Fears of the EU’s Solidarity?
Looking to the week ahead, we could see the US Dollar (USD) continue to remain subdued if Europe’s and China’s coronavirus cases continue to dwindle, as this would boost appetite for riskier assets.
The Euro (EUR) meanwhile could come into some trouble if the Eurozone fails to unify over a rescue plan. If the north-south divide continues to grow the single currency could fall as fear mount on the European Union’s solidarity going forward.