Euro slides on Merkel call for tighter COVID curbs, Austria in lockdown


London, Nov 22 (Reuters) – The euro neared a 16-month low on Monday as considerations grew over new COVID-19 restrictions in Europe, with Austria coming into one other full lockdown and Germany contemplating following go well with.

Germany’s appearing Chancellor Angela Merkel advised leaders of her conservative get together that measures being taken to cease the unfold of the coronavirus in Europe’s largest financial system had been inadequate and that stronger motion was wanted. learn extra

Meanwhile Austria started its fourth lockdown, the primary since vaccines turned broadly obtainable, shutting Christmas markets, bars, cafes and theatres. learn extra

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The euro slipped 0.2% to $1.1275 at 1300 GMT, nearing a 16-month low touched on Friday when Austria introduced the lockdown.

“The EUR/USD outlook feels like one of those rare occasions when everything is aligned against the euro,” Kit Juckes, head of FX technique at Societe Generale in London, advised shoppers.

“COVID-19 is a bigger problem in Europe than anywhere else,” he mentioned, including it was not the one issue. The Chinese slowdown and international provide chain points are hurting Europe greater than the U.S., whereas expectations that the Federal Reserve will elevate charges supported the greenback, he mentioned.

New lockdowns and stress on the service sector in Europe now present the European Central Bank with many extra causes to go sluggish on tightening its coverage, ING mentioned in a notice.

Borrowing prices for U.S. {dollars} in forex derivatives markets rose to their highest ranges in almost a yr.

Three-month cross-currency swaps for euro-dollar fell to their lowest ranges since December 2020, in response to Refinitiv information, suggesting larger demand for the dollar. L8N2SD31D

The greenback bought further help from bullish feedback on Friday by Federal Reserve officers Richard Clarida and Christopher Waller, who urged a sooner tempo of stimulus tapering could also be acceptable amid a quickening restoration and heated inflation. learn extra

The greenback index , which gauges the forex in opposition to six main friends, traded little modified at 96.131, staying nearby of final week’s 16-month excessive of 96.266.

A extra speedy finish to tapering raised the potential of earlier rate of interest will increase too.

The minutes of the Federal Open Market Committee’s assembly early this month, when policymakers introduced a begin to tapering, are due on Wednesday. They could present extra perception on what number of Fed officers are contemplating sooner tapering or earlier charge will increase.

U.S. President Joe Biden can also be more likely to announce his nominee for Fed chair this week, after reaching a call on whether or not to maintain incumbent Jerome Powell or elevate Fed governor Lael Brainard to the publish.

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Reporting by Joice Alves, further reporting by Kevin Buckland; Editing by Ana Nicolaci da Costa, Philippa Fletcher, Chizu Nomiyama and Alexander Smith

Rolled Euro banknotes are placed on U.S. Dollar banknotes in this illustration taken May 26, 2020. REUTERS/Dado Ruvic/Illustration