The euro is near a 3-month high. It is on course for a third week of gains. Due to the economic recovery, safe-haven currencies are soft on optimism. The Hong Kong dollar is at the sharp end of its dollar peg range. The rate of United States’ unemployed is forecast to soar near 20%.
The European Central Bank expanded its stimulus by more than what was forecasted. This was to prop up an economy dealing with its worst recession since World War Two. Thus, on Friday, the euro held on to significant gains.
In Asia, the gains for the euro supported the appetite for riskier currencies. Thus, against a basket of currencies, it helped to push the United States dollar near a three-month low.
The European Central Bank increased its emergency bond purchase scheme by 600 billion euros to 1.35 trillion. Moreover, it extended the program to mid-2021. Markets were forecasting an expansion of 500 billion euros.
On Thursday, the euro fetched $1.1338. Thus, it raised to as high as $1.1362 on Thursday. This is the loftiest indicator in almost three months.
Euro and Others
The single currency has risen by 2.1% on the week. Thus, it is set to clinch a third straight week of gains.
Last month, Germany threw its weight behind the EU recovery fund. Thus, it broke away from its long-held tradition for resisting moves towards fiscal integration in the currency bloc. Therefore, the confidence felt by investors in the currency has also grown.
Zach Pandl is co-head of global foreign exchange at Goldman Sachs in New York. He said that the recent actions by both the European Union Commissions, as well as the European Central Bank, had reduced tail risk around the economic outlook for the euro area.
Moreover, he added that the main challenge for Europe is its incomplete architecture for fiscal policy. Nevertheless, European institutions are committing to essential changes in correcting those weaknesses.
This is the current news of the market today.