Euro is having a hard time rising, especially amid the shortage of vaccine supply in the EU. So, in an attempt to solve this, the European Union announced that they are ready to tighten rules for export (of the COVID-19 vaccines), which could lead to a serious conflict with other countries.
Charles Michel, President of the European Council, raised this issue yesterday, saying that it is necessary to establish control over the production of vaccines because the slow spread of the drug in the EU could pose additional threats to political stability. Many executives are also unhappy with the fact that amid the shortage, manufacturers are still supplying it to other countries.
In another note, US Treasury Secretary Janet Yellen met with small business owners yesterday, and criticized Senate Republicans who are struggling to slow down President Joe Biden's $ 1.9 trillion plan to fight COVID-19. House Speaker Nancy Pelosi said the House will meet next week to take another step towards passing the bill. And although many Republicans have expressed support for another stimulus, they oppose some inclusions in Biden's proposal. The GOP believes it is better to wait and see the impact of last month's $ 900 billion aid package, before pushing another massive bill.
But the release of the GDP report yesterday could spark more fierce controversy as Democrats will now press on the numbers, demanding more economic stimulus.
According to the data published by the US Department of Commerce, GDP grew by only 4.0% in the 4th quarter, which is much lower than expected. Nonetheless, the overall situation of the economy is not that bad.
Clearly, the main reason for this is the coronavirus, because if not for its second wave, the US economy would have completely bounced back by the end of 2020, especially given the stimulus programs that are now being carried out by the Fed and the US government.
GDP growth in the fourth quarter was directly related to the increase in investment in fixed assets, as well as in the increase in consumer spending. However, growth was offset by cuts in government spending and increase in imports, as well as weaker growth in consumer spending. The Department of Commerce also added that the increase in health care spending was partially offset by lower spending on goods, primarily in food and beverages. Nonetheless, US GDP is expected to grow by 5% this 1st quarter, and then jump by 10% in the next, especially if the US Congress decides to pass the proposed $ 1.9 trillion bill.
In terms of inflation, consumer price increases, excluding volatile food and energy categories, is reported to have slowed to 1.4% in the fourth quarter.
Employment in the US was also reported to have improved. In particular, initial jobless claims have decreased by 67,000, so the overall total was only 847,000. Economists had expected it to be 875,000.
Repeated claims, meanwhile, rose to 868,000, which is up by 16,250 from the previous reporting week.
It seems that the additional financial assistance, as well as vaccine distribution, have delivered a positive impact on the labor market.
The Department of Commerce also said the situation in the housing sector has improved, jumping by 1.6% last month, after falling by 12.6% in November. Even the average new home price increased by 3.5%, thereby hitting $ 355,900.
As for EUR/USD, the low trading volatility this week will not allow a more active movement in the market, but a break above 1.2135 will certainly bring the quote to 1.2180 and 1.2220. Movement below 1.2090, meanwhile, will bring the euro to 1.2050, a break below which will push the quote towards 1.2020.
The most important news for today are economic reports from Germany and France. In particular, data in unemployment, GDP and consumer spending. Then, by mid-afternoon, the European Central Bank is due to release credit data for the private sector.
