The Euro, which had showed little reaction to the European Union’s announcement yesterday morning about the €750bn Recovery Fund, did eventually spring back to life yesterday afternoon with EUR/USD rising to above 1.150.
The cross has pushed higher in today’s session, threatening to break through 1.16, although this is partly due to broad-based Dollar weakness. Indeed the Dollar DXY index is down for the fifth consecutive session and has now weakened in 9 of the past 10 trading sessions. The more risk-sensitive Australian and Kiwi Dollars have also rallied against the US Dollar, with the Aussie Dollar seemingly unencumbered by the release this morning of weaker-than-expected June retail sales figures (+2.4% mom vs 7.1% mom expected).
The outlier has been Sterling which has lost ground to the US Dollar and other major currencies. Sterling has seemingly been weighed down by reports that the UK and US are unlikely to agree to a trade deal by end-year and that Russia may have interfered in the UK referendum on EU membership back in June 2016.