Australian Dollar Gains Strength As Euro Stays Capped After ECB Rally

Australian Dollar Gains Strength As Euro Stays Capped After ECB Rally

The accelerating rally in iron ore prices is pushing Australia as a whole today amid a sustained risk appetite. The Australian dollar is currently the strongest of the week, followed by the New Zealand dollar, while the Canadian dollar is close on the back of oil prices.

Sterling remains the worst due to the “high likelihood” of a no-deal Brexit, which also helps to support the Swiss franc to some extent. The dollar is currently the second weakest in a week, given the rise in jobless claims and a stalemate with new fiscal stimulus.

The Australian dollar has risen sharply today and even outperforms other commodity currencies. The rise in iron ore prices is seen as a driving force. Iron ore entered a parabolic rally after the Port of Pilbara, the world’s largest iron ore export terminal, issued a cyclone warning, exacerbating an already tense market.
Euro Stays Capped After ECB Rally
The ECB held its last policy meeting on Thursday and that meeting was lively. The central bank has increased its Pandemic Emergency Procurement Program (PEPP) by 500 billion euros, to 1.85 trillion euros. The PEPP, which is the ECB’s main tool in the fight against the Covid pandemic, has been extended by nine months until March 2021.

Besides, the central bank extended the Long Term Refinancing Target Operations (TLTRO) by one year until June 2022. This scheme is designed to stimulate bank lending to the economy.

Technically the euro would be interesting as the rally after the ECB had no further momentum. EUR/USD is slightly lower in the Friday session. The EUR/USD pair is currently trading at 1.2113, down 0.19% over the day. EUR/USD meets resistance at 1.2175. Nearby resistance is at 1.2209.

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Author : Azeez Mustapha


Azeez Mustapha is an experienced author, trader, markets analyst, signals strategist, and funds-manager.