Europe is suffering the consequences of a second wave of COVID-19. Thus, the financial legislators of the region decided to make a complex decision for the European bloc. As a result, the euro falls to a 4-week low in the Forex market, now that the European Central Bank signaled further monetary easing in December.
National closures are picking up in Europe. Many relevant countries in the region are declaring a state of emergency. As is the case of Spain, forcing its economic system to another relevant breaking point.
For this reason, the legislators of the European Central Bank had to face this new situation.
The euro falls to a 4-week low on monetary flexibility
The euro fell against the dollar in Thursday’s sessions. At the same time, the dollar was supported in part by US gross domestic product data, which showed record growth for the third quarter, as well as an improving trend in jobless claims.
But the focus of Forex market traders was on the ECB, analysts told a Reuters report. COVID-19 also forced national closures in Germany and France.
The ECB, which kept interest rates in the euro stable during the economic opening, as a plan to help the union’s member countries, pledged on Thursday to contain the growing consequences of a second wave of coronavirus infections. And he said he would refine his response at their December meeting.
Erik Bregar, head of foreign exchange strategy at the Exchange Bank of Canada in Toronto, said the euro’s slide was “a reflection of further monetary easing by the ECB.”
Price of the euro to date
At the time of writing, the euro is trading with its peer to the dollar at 1.1672, when in the afternoon (4 GMT) it was trading at 1.1676. Falling to a minimum of four weeks the euro. This according to SimpleFX data.
It is worth mentioning that the precaution before the US elections, triggered the worst sell-off in the market since June earlier this week.
For its part, the dollar index, having the euro as the largest component of competition in the Forex market, rose to a maximum of 4 weeks, to 93.94 points.
Also, the dollar benefited slightly from data showing a record growth rate in US GDP for the third quarter.
In this way, the American gross domestic product rebounded at an annualized rate of 33.1% in the last quarter. This by an early estimate, the fastest pace since the government began keeping records in 1947. That followed a historic rate of contraction of 31.4% in the second quarter.
A separate report showed that 751,000 people applied for state unemployment benefits in the United States. This in the week ending October 24, compared to 791,000 in the prior period.
Finally, the complicated outlook of this second wave of COVID-19 affects economic recovery efforts on the global scene, not just the euro.
Likewise, governments are again affecting the performance of the Forex market by implementing a second economic blockade and, potentially, a double-dip recession in the most competitive Forex currencies, according to EnQuéInvertir.