The euro has rallied as the USD’s strength has weakened over the past week or two. The USD slid to a six-month low on New Years Eve which set up the euro and other trade-sensitive currencies to edge up against it. Investors are also increasingly optimistic about the global growth prospects for 2020 as US-China trade relations appear to be improving and the ‘phase one’ deal is set to be signed at the end of the week.
Stabilisation in the Eurozone Helps Lift Euro
Economists are noting that the Eurozone economy is looking more stable in recent weeks which brought about a lift to the Euro as investors have unwound short positions. The euro still lost 2% of its value against the USD in 2019, but with the recent weakness of the dollar, it has allowed the euro to edge up against it like the well-performing GBP. Investors in the euro have helped drive up the currency 0.3% to $1.1230 as risk-sentiment increased.
Euro Hopes to Bank Off the Global Growth Arising from the US-China Deal
Optimism surrounding the global economic growth is rising as the US-China ‘phase one’ deal looks to be signed at the end of the week. The Chinese Vice Premier, Liu He is set to fly to Washington on Saturday to prepare to sign the deal. The deal will lighten tensions between the world’s two leading economies and lift the global economy as tariffs imposed on China are lifted. The euro benefitted from the rise in optimism of the deal being finalised and put on the shelf as it encourage investors to buy up currencies that are linked to trade and global growth like the euro.
For the euro, the exchange rates did not shift much on New Year’s Eve, but it closed the year above 1.12. With little economic data, the euro has been edging up against the USD based on its recent under-performance which has provided a good amount of volatility in the EUR/USD exchange rate. Investors in the Euro will be keen to observe the results from the Eurozone’s manufacturing PMI data which is set to be released this Thursday.
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