The resurgent euro which has been rallying,on the back of recovery hopes for the eurozone economy got another shot in the arm on Thursday after the European Central Bank delivered a bigger than expected stimulus. The ECB boosted its pandemic emergency purchase program by a bigger than expected 600 billion euros and while the ECB sharply lowered its economic projections.
ECB President Lagarde pointed to some signs that the downturn is bottoming out. Her comments underscored the central theme,that’s been driving risk assets higher,over the past month and that is a recovery whatever shape or form will come in the second half of 2020. Investors are growing confidence that “the worst is over” propelled the euro to 3-month high versus the dollar, coming within sight of the one dollar fourteen level on Friday. The increasing optimism wasn’t confined to the euro, as all majors as well as emerging market currencies advanced against the mighty,US dollar.
The Australian dollar was testing the psychologically-important,0.70 level even as sino-us tensions lingered in the background. Sterling was also able to enjoy some positive momentum despite brexit concerns as it surged past the one dollar 26 level to reach a near three-month peak. Negotiators from Britain and the EU have,been unable to resolve differences on key issues after a week of talks with the end of June deadline for extending. The UK’s transition period is fast approaching an EU summit in two weeks time; may be the last hope for a breakthrough in contrast the dollar sagged with its index against a basket of currencies on track for a 7th straight session of losses. The non-farm payrolls report for May due out of the,u.s. later today is unlikely to be able to provide much support even if America’s jobless rate doesn’t jump to almost 20 percent as is being anticipated after a brief wobble. This week on doubts about whether OPEC and its allies will be able to reach a deal on extending their output cuts oil prices are on the up again,the OPEC plus group of countries were due to hold a meeting on Thursday but it has now been postponed to June 6th, an extension of at least one month is,looking increasingly certain and that,should support oils rally for a while longer.
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