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Weekly roundup: Euro rebounds as Omicron seen as narrowing ECB’s policy divergence

currency-newsWeekly roundup: Euro rebounds as Omicron seen as narrowing ECB’s policy divergence
The euro got off to a poor start last week as a worrying rise in Covid cases across Europe fueled concerns that more countries may be forced to join Austria in imposing new lockdown measures.

The subsequent publication of the Eurozone’s latest PMIs figures then helped the single currency quickly bounce back after both the bloc’s manufacturing and services sectors reported a surprise expansion of growth in November. 

An underwhelming business climate index from Germany as well as a strengthening US dollar then saw the euro relinquish some of this support again during the middle of last week.

However the euro, then rebounded again at the end of last week’s session, as the adjustment of Fed and BoE rate expectations in the face of the Omicron Covid variant also limited the pricing in of policy divergence between the European Central Bank (ECB) and its peers.

The euro has been able to maintain a positive trajectory so far this week, as Omicron concerns continue to rattle markets, while a record surge in Eurozone inflation also appears to be underpinning the single currency.

But it remains to be seen whether the euro will be able to sustain these gains, especially if more Eurozone countries are forced to tighten restrictions.
 
Philip McHugh

Philip McHugh

Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure

Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)

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