The Euro plummeted to this month’s lows. Overview for 30.10.2020

EURUSD continues falling in anticipation of the presidential elections in the USA.

The major currency pair is retreating and has already reached the lows of September 29th. The current quote for the instrument is 1.1678.

The European Central Bank left its monetary policy intact during the October meeting but provided signals about possible easing as early as in December. This news put additional pressure on the European currency. 

The regulator kept the benchmark rate at 0%. In the comments, the regulator said that short-term outlooks relating to the region’s economy were getting worse, investments in business found themselves under the “virus” pressure, and consumers remain pretty careful and cautious. All published macroeconomic reports indicate a lower activity in the fourth quarter of 2020, while inflation is expected to remain negative. However, the ECB is sure that after the pandemic situation improves at least a little bit, the demand will recover, thus boosting inflation growth in the mid-term.

The next meeting of the ECB is scheduled for December 10th, and by that time the regulator might be ready to revise the necessity of additional support to the economy because it will have updated outlooks. 

The latest statistics from the USA were a pleasant surprise. The preliminary report on the GDP Growth Rate in the third quarter of 2020 showed +33.1% q/q against the expected reading of +31.0% q/q. Of course, such a record-breaking improvement is based solely on global stimulus measures implemented in this quarter: the country’s economy got support in the amount of $3T. As a reminder: in the second quarter, the economy lost 31.4% q/q. The current growth eliminates the previous drawdown but doesn’t solve any crucial problems. 

By the way, it’s quite interesting that such strong numbers were published just days before the presidential elections in the USA.