European session review: USD and JPY depreciate amid improved risk appetite

USD and JPY depreciated against most other major currencies in the European session on Tuesday as risk appetite improved after the European Union (EU) leaders agreed on a EUR750 billion recovery fund, comprising of EUR390 billion in grants and EUR360 billion in low-interest loans. The fund will be available from January 2021 and there will be no new bridge financing until then. This is because the EU has taken other measures since the coronavirus crisis struck to provide liquidity to the member states if they are needed.

However, the German economy minister Peter Altmaier said today that "it's possible that the EU money could be available earlier than next year". He also noted that the agreement increases the chances of "a cautious, slow recovery" in the second half of the year.

In addition to the recovery fund, the EU officials reached a deal on the bloc's six-year budget worth about EUR1.1 trillion.

Investor sentiment also remained buoyed by yesterday's reports about positive results for COVID-19 vaccine candidates from Pfizer (PFE)/BioNTech (BNTX) and AstraZeneca (AZN)/the University of Oxford as well as hopes for more stimulus in the U.S.

According to Reuters, aides of the U.S. President Donald Trump and Congressional Democratic lawmakers are set to discuss the next steps in responding to the coronavirus crisis later today, with congressional Republicans saying they are working on a $1 trillion relief bill.

Meanwhile, worsening U.S.-China tensions and rising COVID-19 infections kept optimism in check. 

The U.S. Department of Commerce added eleven Chinese companies to a list of entities that are believed to be committing human rights violations in Xinjiang. 

According to the Johns Hopkins Center for Systems Science and Engineering, the total number of confirmed global cases of the COVID-19 rose to 14,729,037, with the U.S. recording 3,831,430 coronavirus cases, the most in the world. Growing coronavirus infections forced many businesses and states to reimpose lockdowns, raising concerns about the pace of U.S. economic recovery. 

USD and JPY rose slightly against EUR. USD traded marginally lower against JPY.