The US dollar strengthened against major currencies on Friday, December 11. The DXY dollar index rose 0.21 percent to 91.98 points, while at 1.2144, the EUR/USD exchange rate was up 0.54 percent. The DXY index lost 0.29 percent a day earlier, and the Euro rose by 0.50 percent against the dollar.
The European Central Bank meeting was Thursday’s main event. The regulator left the main rate at 0 percent and the deposit rate at -0.5 percent, according to its findings. However, the ECB has reported an expansion of EUR 500 billion ($606 billion) of the PEPP bond repurchase program to EUR 1.85 billion and has extended it for nine months, until the end of March 2022. Around the same time, at least until the end of 2023, the redeemable bond denominations will be reinvested. The monthly amount of APP asset purchase program operations will remain at EUR 20 billion. In addition, the ECB extended the preferential terms of lending to banks under the TLTRO-III scheme for another 12 months, until June 2022. Four new options for long-term emergency refinancing (PELTRO) will also be provided in 2021, which will help to provide successful liquidity support. The relaxation of collateral conditions will be prolonged until June 2022.
During a press conference, ECB head Christine Lagarde noted that the coronavirus pandemic presents continuing risks to the European economy. The Central Bank expects Eurozone GDP to shrink by 2.2 percent in the fourth quarter as a result of the second COVID-19 wave. Lagarde also noted that the situation in different sectors of the economy remains uneven: the service sector is in a more vulnerable position than the industry as a result of restrictive measures. At the same time, news of the imminent delivery of coronavirus vaccines makes it possible to foresee next year’s economic recovery with greater faith.
As far as macroeconomic statistics are concerned, data on the index of consumer prices in the United States emerged from important indicators. Inflation was 1.2 percent year on year in November, the same as a month ago, 0.1 percentage points higher than the consensus estimate. Data was also reported in the United State on the number of initial applicants for unemployment insurance. Compared to the previous value of 716,000, the indicator increased to 853,000 for the week ended December 5, while analysts expected a value of 725,000.