Dollar Drifts Higher; Euro Falls over Growth Comparison

Dollar Drifts Higher; Euro Falls over Growth Comparison

The dollar edged higher against the euro in early European trading, Wednesday, over the state of Europe’s pandemic recovery. This has weighed against its U.S. equivalent.

The Dollar Index was up 0.1% at 91.097 at 3:55 AM ET (0755 GMT).

EUR/USD lost 0.1% to 1.2037, after dropping as low as $1.2011 overnight. This was its weakest level since the start of December. 

USD/JPY added 0.1% to 105.06, while GBP/USD lost 01% to 1.3653. The risk-sensitive AUD/USD added 0.1% at 0.7617.

On Tuesday, euro zones official GDP data came out. It showed that the gross domestic product in the 19 countries sharing the euro fell by 0.7%. That’s quarter-on-quarter in the final quarter of 2020, for a 5.1% year-on-year decline. 

The region was heading for another, probably sharper decline in Q1 of this year. That’s with the lockdowns likely to combat the pandemic.

In the final quarter of last year, the U.S. recorded 4.0% annualized growth. On Tuesday, Congress made the first moves towards passing President Joe Biden’s $1.9 trillion stimulus package.

The Congressional Budget Office (CBO), earlier this week, forecast the U.S. economic growth to recover “rapidly”. By mid-2021, GDP is expected to return to its pre-pandemic size.

Lifting the Rate of Vaccination

President Biden’s administration has made it a policy to lift the rate of vaccination for the population. Over 33 million shots have already been delivered. 

Only the U.K. can compete with that rate in Europe. More of continental Europe is struggling to organise a steady vaccine rollout. 

Elsewhere, USD/CNY gained 0.1% to 6.4594. Economic data showed China’s services sector grew at the slowest pace in nine months in January. An outbreak of Covid-19 cases in the country impacted consumer sentiment.

Caixin services Purchasing Managers Index came in at 52. It was above the 50-mark indicating expansion, but still a fall from December’s 56.3.