Dollar Index Took A Dip On Weekend While Fed And ECB Not Seeing An Early Economic Recovery

The USD/EUR exchange rate consolidated on Friday, 13 November, closing at 0.8448 euro. December futures also displayed a 0.26 percent decline on the DXY dollar index and were at the 92.72 mark. A day earlier, the European currency rose by 0.24 percent to 1.18062 against the dollar, while the DXY indicator dropped by 0.07 percent to 92.96.

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A main event on Thursday was the speeches by the heads of the Fed and the ECB at the European Regulator’s annual Central Banks Forum. Federal Reserve Chief Jerome Powell noted that some hope was sparked by the news about the high efficacy of the coronavirus vaccine developed by BioNTech and Pfizer. However the US economy may face severe difficulties in the short and medium term due to the second wave of the pandemic, which will entail additional steps to help the American people and businesses. ECB head Christine Lagarde showed a similar stance saying that COVID-19’s negative effect on business activity in the European region will continue in the coming months. At the same time, in the current quarter, the ECB is expecting a second recession in the EU. In order to help the economy, the regulator can extend the Pandemic Emergency Purchase Program (PEPP), as well as lending to banks, at its December meeting. But such an increase in the ECB’s monetary incentives could lead to the weakening of the European single currency.

The U.S. inflation data published on Thursday highlighted that indicator was +1.2 percent year over year in October, compared to +1.4 percent year over year a month earlier and the analysts’ estimates of +1.3 percent year over year

Data on the producer price index published on Friday increased by 0.3 percent on month-on-month basis in October, compared to a forecast of 0.2 percent. Also data calculated by the University of Michigan indicated a decline of U.S. consumer confidence, which dropped to 77 in November compared to 81.8 in October while consensus for the same was 82.