The dollar weakened, but the EUR/USD pair still remains above 1.20 mark. The corrective rise in the US currency is mainly due to the retreat in the equity markets, reflecting a decrease in risk appetite on global markets. The pound and the franc, as well as the yen, gained the most in the last week.
Good and bad news from the pandemic front
Pfizer/BioNTech - the product of this consortium is mainly responsible for achieving herd immunity in the European Union. In the next month, it will have a share of more than 60% in the supply of vaccines. In total, this year's deliveries will amount to about 600 million doses. Moreover, deliveries of tranches scheduled for later dates are already being accelerated. Additionally, the European Medicines Agency has ruled that the benefits of the specific outweigh the risks. Combined with improvements in the vaccination process, greater availability results in an acceleration of the EU program. Most notably: in Germany, the vaccination rate has almost doubled.
This fuels enthusiasm towards the euro. Such a situation also supports currencies whose fate is tied to the economic situation in the eurozone, including the zloty, and Scandinavian currencies, with the Swedish krona at the forefront. About 1.5 million doses have already been delivered to Poland this week, and by the end of the quarter, it is expected to total 27 million. While in Europe, the restrictions are again being lifted (in Poland, this may take place in a few weeks), and investors expect an economic upturn similar to the one in the UK or even in the US, other parts of the world have provided information which temporarily disturbed investors' enthusiasm and led to a cooling of sentiments on the equity and oil markets. This time the source of market anxiety is the situation in Asia. In India, a massive increase in the number of diseases has been reported. In turn, authorities of cities in Japan such as Tokyo, Osaka appeal to the government to introduce a state of emergency and tighten restrictions to maximally suppress the epidemic before the Olympic Games.
German politics try to be in the limelight
In the absence of important macroeconomic data and in anticipation of the events of the second part of the week, the financial markets also focused (probably more than would otherwise have been the case) on the developments on the German political scene ahead of the September elections. Firstly, Armin Laschet was officially confirmed as the CDU/CSU candidate for Chancellor and to take over Angela Merkel's succession.
He faces a difficult challenge because negative trends for the Christian Democrats have dominated opinion polls for a long time. The Greens are even leading in single recent polls. Following the nomination of Annalena Baerbock to run for Chancellor, some commentators predict a further increase in support for this fraction. The key question for the political future of the largest European economy will be who will form the governing coalition and whether it is possible without the CDU/CSU.