Euro and Pound Climb on Good Developments


Euro and Pound Climb on Good Developments


The U.S. Dollar continued to lose ground overnight as the spark of optimism from yesterday’s session is fading with investors taking in that the pandemic has cost over one million lives globally and that the economic help needed to beat the crisis is far from enough.


Indeed, things are looking rough to end September without much clarity and plenty of risk events in Q4. Democrats in the U.S. Congress proposed another version of their spending bill proposal to see if that sticks. However, businesses may have to deal with the consequences of a no-deal scenario that will see legislators leave town to campaign prior to elections. The Employment Situation we are awaiting on Friday will be the last reading before the November vote.

Without any major data, until we look at Purchasing Managers Index tomorrow, all eyes will be solely focused on today’s approach to reaching a fiscal spending agreement. There are warnings from the Center and Disease Control that spread of the virus will flourish under winter conditions, thus we shall see how markets react and if it ends benefitting the buck as hope for a return to normalcy have to be locked aside for a while.

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Back in green territory, the Euro is returning to levels last seen at the start of the week prior to as good news hit the country overnight. Much credit for the Euro’s recovery in the last three months is due to the historic achievement in the form of fiscal integration that was the EU Rescue/Recovery fund. For a while now, EU legislators and national leaders have been working on releasing the funds and progress has been made. Germany’s Angela Merkel wants to make things a bit easier.

The €750BN could be unlocked to all nations, even Poland and Hungary, who are meant to be major recipients but are under violation of certain EU democratic norm requirements. It seems like the push for more sovereignty that came with new governments is now butting heads with the largest member nations who made the funds a possibility.


The Pound is experiencing some gains and optimism as Monday presented good news on the Brexit front and the political tension in the U.K. is calming down slightly. After giving himself some extended powers in the pandemic, Prime Minister Boris Johnson has faced challenges from his own Tory membership but seems to have made a compromise. The country is, unfortunately, considering lockdowns. When it comes to negotiating a possible deal, the tone during talks yesterday was much more conciliatory, and seems like behind closed doors some details have been ironed out. This all bodes well for a comeback to high ranges for Pound short-term.