The depreciation of the EUR/USD currency pair at the beginning of the week provoked a breakdown of the 1.12644 support zone, which indicates the caution of investors before the news. Positive EU statistics did not strengthen the European currency.
US Treasury bonds are at a November low of 1.627%.
The US currency was supported by comments from representatives of the US Federal Reserve, namely Christopher Waller and Richard Clarida. They talked about accelerating the reduction of incentives due to a steady recovery and rising inflation.
Trading activity increased on Tuesday. The consolidated purchasing managers' index PMI in the EU reached 55.8 points in November, which is confirmed by Markit calculations. Preliminary data in October indicated 54.2 points. This indicator indicates changes in the economy and that the European currency is not turning against the dollar.
Francois Villeroy de Galo, ECB representative, believes that there is no need to increase the volume of bond repurchases at the end of the PEPP term. This will be appropriate in the spring of the coming year.
On Wednesday, the yield on 10-year US bonds was at 1.648%. Preliminary data from the US Department of Commerce indicate that by the end of the 3rd quarter, GDP grew by 2.1% over the year, and by the end of the 2nd quarter by 6.7%. Representatives of the department believe that the slowdown in consumer spending, the increase in the number of infected Covid-19, the next sanitary restrictions and the reduction of social payments also affected the slowdown in growth. Experts predicted GDP growth of 2.2% for the year following the results of the 3rd quarter.
But this did not stop the strengthening of the dollar and the currency pair reached a November low of 1.1186.
Coronavirus affected the markets on Friday. WHO representatives gathered for an emergency meeting to discuss the consequences of the Nu strain. It contains a spike protein, which modern COVID-19 vaccines are fighting. Because of this, the dollar reached the price levels of the beginning of the week, and the exchange rate of the currency pair was fixed at 1.1310.
Investors are waiting for the statements of Jerome Powell, the head of the Fed, as well as the publication of the EU consumer price index, Canadian GDP for the 3rd quarter and the American consumer confidence index. It is planned to publish data on the American labor market, the Beige Book of the Federal Reserve PMI in the manufacturing sector.