- Euro is recovering, but still at a very low point
- GBP is also weak as the market is waiting for key announcements
- Markets continue to recover despite recession fears
Both EUR and GBP continued to improve slightly on Monday, but still not return to levels for even a week’s time. Both are very reactive to the US dollar at the moment, with most forex brokers still noticing a desire to remain in the currency market. The euro is still below the $ 1.08 benchmark, while the pound also remains below the $ 1.24 mark despite a slow rise.
Euro-market obstacles to ECB actions
One of the key points that hit the Euro hard late last week was the lack of more direct action by the ECB to further stimulate the economy. This was reinforced by the German Constitutional Court’s decision last week declaring that the stimulus program already introduced by the ECB was in violation of German law.
With this and a relatively quiet week on the economic calendar within the EU, much will be asked and how it can threaten the entire EU’s stability. This comes despite a strongly supportive response from ECB chief Christine Lagarde that they are prepared to help block financially. The forex trading, however, trading with the euro would like to see more substantial action beyond the words and rhetoric at this time.
Confusion also rules for GBP and British Lockdown
Sterling also improved slightly on Monday, though this is more on the back of a slightly weakening USD than any major strength in the pound. There is also continuing confusion around the UK Government’s advice. Prime Minister Boris Johnson seemed to contradict some of his own policies by encouraging people to come back to work. There has also been criticism of the government’s plans to potentially adopt a 14-day quarantine for foreign visitors, though some areas are now experiencing an increase in cases that have begun to reopen. South Korea is one such example, where more than 20 new cases reported where leading bars and restaurants need to be closed again.
The current version of Brexit also continues to push the Pound. Negotiations have continued, but no breakthroughs have yet been made. This issue will continue to come into focus as the deadline for the year ends.
Light gains are expected at opening bells
Despite global turmoil, markets continue to improve. All major US indices report weak gains in pre-market trading before the opening bell. Dow Jones will be looking at clawing back some of the 100 points it lost yesterday, while others hope to continue cutting away to regain their pre-virus levels.
A tentative eye will be on the gradual reopening of the economy, especially given the increase in cases elsewhere this has taken place. Dealers are also waiting to hear from Dr. Anthony Fauci, who is set to testify before the Senate Health Committee today to discuss the impact of potential reopening.
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