Dollar strengthened amid good data on US retail sales. The index increased due to additional government stimulus, the aim of which is to set off rapid recovery to pre-crisis levels.
As for the EU, some member states are disagreeing with the allocation of the EU recovery fund, thereby putting pressure on the European currency.
Nevertheless, soon, member countries will have to submit their plans to the European Commission. They have to detail and justify their need to receive certain amounts of aid. But all in all, the EU recovery fund consists of € 312.5 billion in grants and € 360 billion in low-interest loans over the next six years. All 27 member states are expected to receive assistance.
The fund was established last summer. And, according to experts, it will lead to closer integration of European countries. In a statement, EU Commissioner Paolo Gentiloni said the fund will allow economies to recover faster, much more than what it would undergo if support is only from the European Central Bank.
The fund also does more than just fight COVID-19. It intends to kick-start the EU's plans to cut carbon emissions over the next 30 years and modernize its economy to properly take advantage of the digital revolution.
However, most of the fund will be distributed among countries such as Spain, Italy, France, Germany, Poland and Greece. The rest of the members will get a much smaller amount.
Going back to the US, the Department of Commerce published a report yesterday that indicated a spike in retail sales. The data for January turned out much better than expected, with sales jumping 5.3% higher than its figure a month before. Excluding the sales of cars and its parts, the index increased by 5.9%.
Producer prices also grew much more than expected, which will surely lead to increased price pressures in the future. The report said PPI rose to 1.3% in January, after rising by 0.3% in December. The Economists expected the index to increase by only 0.4%.
The Federal Reserve also published its latest minutes yesterday. However, many already expected its contents since it was already clear that the central bank does not have any intention of changing its monetary policy in the near future. The protocol emphasized that the US economy is still far from achieving employment and inflation targets. Therefore, the Fed will not touch interest rates, at least until economic figures improve.
The European Central Bank will most probably have the same stance on its monetary policy. Hence, its minutes, which will be released today, will most likely say that key interest rates and bond purchase program will remain unchanged.
A number of economic reports will also be published today. For example, latest data on jobless claims and issued building permits in the US. If these indicators come out better than expected, demand for the dollar will continue to rise in the markets.
Consumer confidence in the EU is also expected to be revised downward, and this will put additional pressure on the euro.
So, with regards to EUR/USD, today's movement will depend on 1.2050, a break above which will push the quote up to 1.2090. But if the euro trades lower, price will drop to 1.2000 and 1.1950.
AUD
Unemployment rate in Australia rose by 6.4%, even though around 29,100 new jobs were created and the number of full-time jobs increased by 59,000.
Despite that, AUD/USD still traded upwards, albeit at a much slower pace than the week earlier. Bears have to take control of 0.7715 if they want the price to drop to 0.7655 and 0.7600, because if the bulls successfully push the pair above 0.7780, price will climb upwards, towards 0.7810 and 0.7860.
