Despite a raging second virus wave in many Eurozone nations, the common currency is on a tear. It is almost hard to believe that EUR/USD hit a one month high on Wednesday. Some of the biggest countries in Europe have implemented new restrictions and Europeans are staying at home as much as possible. This behavior will undoubtedly weigh on growth.
There have been some comments suggesting that the European Central Bank (ECB) is not ready to ease policies, but if the economy freezes up from a second wave, it will have no choice. The only reason EUR is strong is because of its attracting demand from investors selling USD.
GBP also hit a one month high versus the greenback. Brexit deal hopes and mixed inflation data helped to lift the currency. Consumer prices rose in September, which was less than expected but stronger than the previous month. Producer prices beat expectations and rose at a faster pace. The durability of EUR and GBP rally will hinge upon Friday’s PMI reports.
Recently, the New Zealand and Australian currieries saw strong gains today on the back of USD weakness. There’s a very clear trend of improving NZ data and weakening AU data that should continue to drive these currencies lower.
