Money

Euro hits four-month high on Covid-19 recovery fund hopes – business live


The euro was leading the gains after European leaders made progress in negotiating a historic stimulus package, according to media reports. This also explains why the DAX has also been outperforming, and why Italy’s borrowing costs fell to their lowest since early March today as the rally in riskier eurozone government debt saw the spread between Italian 10-year and German bund yields, an important gauge of risk in the region, tighten….

The €750 billion stimulus is going to help speed up the recovery in the euro area, where the virus situation also appears to be under control compared to the US. Investors are therefore anticipating the eurozone to perform relatively better than the US economy, driving the exchange rate higher. However, this is a global issue and if the vaccines prove not to be very effective and coronavirus does not go away, then we may well see haven demand come back for the US dollar and undermine risk assets, including the EUR/USD. But that’s a worry for another day and right now the path of least resistance is to the upside.



READ SOURCE

READ  EU helps protect weak firms from foreign takeovers

Leave a Reply