FOREX-Grim data keeps euro, sterling under pressure

* Euro zone inflation remains weak

* UK posts worst quarter since 1979

* Weak sentiment amid pandemic worries

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Julien Ponthus

LONDON, June 30 (Reuters) – A fresh batch of grim economic
data kept the euro and the pound under pressure on Tuesday as
sentiment faltered amid fears new COVID-19 hot spots across the
world might jeopardise the swift recovery from the pandemic
investors are hoping for.

The common currency lost further ground against the dollar
in morning trading after underlying price pressures dropped
again in the euro zone, underscoring fears that consumer price
growth will remain anaemic for years.

Separately, Britain’s Office for National Statistics said
the economy shrank by 2.2% between January and March, its worst
performance since 1979, as households slashed their spending.

“It’s undeniable that today’s data is not flattering, for
both UK and Euro zone”, commented Ricardo Evangelista, senior
analyst at ActivTrades.

“Today’s numbers offer support to the dollar, especially as
concerns are growing over a second wave of the coronavirus
pandemic”, he added.

The euro fell as low as $1.1199, losing close to
0.4%, before picking up slightly towards midday.

Over the quarter, the European currency staged a 1.7%
comeback after falling by a similar margin during the first
three months of the year marked by the coronavirus financial
market crash.

Sterling traded at $1.2280 after sliding to a
one-month low of $1.2252 on Monday when concerns about how
Britain’s government would pay for its planned infrastructure
programme added to worries about its ability to seal a trade
pact with the European Union.

Against a basket of currencies, the dollar index was up
0.21% at 97.632, holding on to overnight gains after upbeat U.S.
home sales boosted Wall Street.

“From the market’s point of view there is therefore nothing
speaking in favour of the euro this morning, in particular in
comparison to the surprisingly strong US home sales data
yesterday”, said Commerzbank FX strategist Esther Reichelt.

Market have been torn between in the past trading days
between some positive economic developments, notably a rebound
in factory activity in China, and a seemingly resurgent
pandemic.

California and Texas saw record rises in new infections on
Monday while in Britain, a reinforced lockdown was imposed in
the city of Leicester.

A warning from U.S. Federal Reserve Chair Jerome Powell that
the outlook for the world’s biggest economy was “extraordinarily
uncertain”, also kept investors on their toes.

“Markets are jumpy. Tension remains between economic and
virus pickup,” said Moh Siong Sim, an FX analyst at the Bank of
Singapore.

The safe-haven Swiss franc slipped marginally. The
dollar rose 0.1% against the franc to 0.9506 while it also
climbed against the Japanese yen, another currency considered a
safe store of value, and was last up 0.1% to 107.73 yen.
(Reporting by Julien Ponthus and Tom Westbrook; Editing by
Angus MacSwan and Chizu Nomiyama)

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