„An historic day for Europe“. Those were the words of French President Macron after the breakthrough at the EU summit. And even for long-time observers, who have experienced many highs and lows in the history of the euro, the result may have been a special milestone. It is not only the scale of the Corona aid that is convincing, but even more impressive was the determination and speed with which Europe has been pulling together recently – despite all the obvious differences. Of course, there are still some details to be clarified, but unlike in previous crises, we have abandoned the stalling tactics once typical of the EU and have not postponed from summit to summit for the essential decisions. The euro, too, is currently riding the wave of the EU’s newly discovered self-confidence and, while soaring to temporarily over USD 1.19, is not concerned about the undoubted implementation risks of the aid package.
This ignorance is all the easier for him, as his biggest competitor, the US dollar, is currently presenting itself from the worst possible side. The uncontrolled spread of corona in the US, the US administration’s party-political inability to agree on an extension of fiscal aid, Trump’s unconstitutional move to postpone the presidential elections, … the list could be extended at will. Among these the most important development for us is the emerging structural break in the dollar’s self-image as a global safe haven in all situations, which has contributed significantly to its superiority in recent years. In the meantime, we are increasingly observing phases of heightened global risk aversion in which safe havens are in demand, but primarily the Japanese yen and, with some concessions, the Swiss franc rather than the US dollar. Even though there may certainly be the odd setback in the coming weeks and EUR-USD rates around USD 1.15 would be a fairer assessment of the current risk profile, we should get used to the idea that the US dollar is no longer the eternal winner in the currency market.