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NEW YORK (Reuters) - The dollar fell for a third straight session on Thursday, with investors seeking out higher-yielding currencies, as a slew of better-than-expected U.S. data and continued optimism about a massive stimulus package spurred hopes of a recovery in the world’s largest economy.
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The euro, on the other hand, gained versus an overall weak dollar, even as European Central Bank President Christine Lagarde warned about a renewed surge in COVID-19 infections and the prospect of prolonged restrictions that could challenge the region’s economic outlook.
The ECB, which kept interest rates steady on Thursday, also pledged to provide more support for the economy if needed.
Major European Markets Close Weak
BRUSSELS/FRANKFURT/PARIS (dpa-AFX) - European markets closed lower on Thursday as worries about growth amid rising coronavirus cases and prospects for tighter lockdown measures in several places outweighed optimism about additional stimulus from Joe Biden s administration in the U.S.
The European Central Bank s warning about the impact of the coronavirus pandemic on the economy, and some disappointing data too contributed to the weakness in European markets.
The pan European Stoxx 600 edged up 0.01%. The U.K. s FTSE 100 ended lower by 0.37%, Germany s DAX declined 0.11% and France s CAC 40 slid 0.67%, while Switzerland s SMI ended 0.3% down.
Among other markets in Europe, Austria, Czech Republic, Greece, Iceland, Norway, Poland, Portugal, Russia, Spain and Turkey ended weak.
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European Central Bank President Christine Lagarde said Thursday the bank will keep its COVID-19-related economic stimulus package in place as the 19-nation Eurozone economy continues facing economic threats from the pandemic.
Speaking in Berlin, Lagarde said that while newly approved vaccines and vaccination programs in Europe are a plus, the surges of COVID-19 cases throughout the continent have prompted new lockdowns and restrictions that affect the service economy of most nations. The pandemic continues to pose serious risks to public health and to the euro area and global economies, she said.
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Central Bank Watch: BOC & ECB Interest Rate Expectations Update Advertisement
Central Bank Watch Overview:
Both the Bank of Canada and European Central Bank met in recent days, setting the tone for 2021: more easing is possible, but might not be needed.
While the BOC outright complained about Canadian Dollar strength, there’s also the consideration that they can’t do much to stop further appreciation. On the other hand, the ECB avoided specific reference to the Euro itself.
Central Banks Coming into Focus
In this edition of Central Bank Watch, we’ll cover two the first two major central banks to hold rate decisions in 2021: the Bank of Canada and the European Central Bank. The two central banks are quite different, insofar as the ECB’s firepower is on par with the Federal Reserve’s, while the BOC’s lags far behind. Furthermore, the Euro is considered among the global reserve currencies while the Canadian Dollar is not. But both central banks face