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Euro Tumbles to Multi-Year Lows | US Dollar Down Ahead of Data

Published February 13, 2020
  • The euro is continuing its dismal run in February and has now fallen to its lowest level since 2017.  The selloff is being driven by speculation that the economic impact of the coronavirus will keep the European Central Bank dovish.  This sentiment is being confirmed by European bond markets which saw investors buying up bonds and pushing yields lower.  One bit of good news in Europe was German inflation numbers in January coming in at a 6-month high, but it did little to help the euro pick itself up from the lows.
  • The US dollar has turned slightly positive this morning after inflation and job numbers beat expectations on almost all fronts.  The lone miss came on the monthly Consumer Price Index reading, which measures price movements on a basket of consumer goods and services.  Despite the positive data, the dollar is being held back by stronger demand for yen and pounds.
  • The pound is shaking off-market risk aversion and is the top-performer among the majors after reports of UK Chancellor Javid’s resignation.  Markets are interpreting this as a positive for the pound as Javid’s replacement, Rishi Sunak, is viewed to be more in favour of boosting fiscal spending as part of Prime Minister Johnson’s post-Brexit economic plan.