EUR/USD retreats to $1.18 as global coronavirus concerns grow

The US dollar strengthened on Tuesday as demand for the safe-haven currency was bolstered by a souring market mood.

Meanwhile, the pound is trading with modest losses so far this morning, with GBP/EUR subdued at €1.1620 and GBP/USD muted at $1.3830. GBP/CAD has dipped to C$1.7138, while GBP/AUD and GBP/NZD have slipped to AU$1.8397 and NZ$1.9769 respectively.

Coming up, will a slowing of Eurozone inflation this month, place the euro on the back foot this morning?
 

What’s been happening?

The US dollar was the top performer during yesterday’s trading session as a prevailing risk-off mood saw investors favour the safe-haven currency.

This slump in risk appetite came amidst rising concern over a resurgence of coronavirus cases in many parts of the world and the fear that this could jeopardise the global economic recovery.

The strong negative correlation between the US dollar and the euro, resulted in EUR exchange rates weakening on Tuesday, despite the Eurozone’s latest economic sentiment index printing at a 21-year high in June.

At the same time, the pound struggled to attract investors yesterday, amidst ongoing concerns over the rise in coronavirus cases throughout the UK and the potential for this to disrupt the government’s reopening plans.
 

What’s coming up?

Looking ahead, the spotlight today is likely to be on the publication of the Eurozone’s consumer price index later this morning.

June’s preliminary CPI figures could place some pressure on the euro, as an expected slowing of inflation will likely reaffirm the European Central Bank’s (ECB) dovish stance on monetary policy.

Meanwhile, GBP investors will be looking to Bank of England’s (BoE) outgoing Chief Economist Andy Haldane for fresh impetus today. This will be Haldane’s last public appearance as a BoE policymaker, and the policy hawk could use it outline his case for why the bank should start to ‘turn off the stimulus taps’.

Across the pond the focus will be on June’s ADP employment report. While not as influential as the US non-farm payroll figures, which will be published on Friday, they could provide an early indication of whether or not this month’s payroll release may disappoint again.