The Euro climbed up slightly after three days of selling on Thursday. It rose to $1.0808, near to the week-and-a-half lows hit a day earlier around $1.0782. Euro has lost more than 1.5% this week.
Traders are cautious as a German court ruling is scheduled this week. The European Central Bank’s stimulus scheme partially depends on the court’s decision. On Tuesday, Germany’s highest court gave the ECB three months to justify purchases under its bond-buying program. If not, it will lose the Bundesbank’s participation in one of its main stimulus schemes.
On the other hand, the Sterling skyrocketed after the Bank of England held off on more stimulus and left interest rates steady. The pound rose by 0.4% against the Euro and the dollar.
Antje Praefcke, the Commerzbank analyst, noted that things could deteriorate further for a eurozone, which is already battered by the coronavirus pandemic. Adding the German Constitutional Court’s ruling on the Public Sector Purchase Programme on the mix hit the Euro harder.
Deutsche Bank analysts have already cut their euro view from bullish to neutral, revising their mid-year forecast to $1.08, lower than the previous $1.13.
What about the Chinese Yuan and Japanese Yen?
Meanwhile, the safe-haven yen lowered slightly from near seven-week highs against the dollar. As the reports about China seem optimistic, demand for the safe-haven yen reduced. The U.S. dollar rose by 0.2% at 106.31 yen, after falling on Wednesday to 105.985, its weakest point since mid-March.
Chinese exports soared by 3.5% despite expectations of a 15.7% drop. As a result, the Chinese yuan and the Australian dollar increased. The Aussie gained 0.8% at $0.6473.
However, investors remain cautious due to the tension between the United States and China as the Trump administration weighs punitive action against Beijing over its early handling of the coronavirus outbreak.
Meanwhile, Turkey’s lira collapsed to a record low of 7.25 per U.S. dollar, extending its losses after comments from a Federal Reserve policymaker, traders interpreted them as ruling out prospects of the Fed extending a swap line to Ankara.
COMMENTS