European session review: EUR mixed amid improved risk sentiment

EUR traded mixed against its major rivals in the European session on Tuesday with gains versus USD, JPY and CHF, declines versus AUD and NZD, and flat versus GBP and CAD.

Investors' appetite for risk was bolstered by encouraging recent news about COVID-19 vaccines, the U.S. president Donald Trump's decision to accept Joe Biden's White House transition as well as media reports about the potential appointment of former Fed Chair Janet Yellen as the U.S. Treasury Secretary.

Markets also digested better-than-expected data out of Germany, the region's largest economy. The Federal Statistical Office (Destatis) reported that Germany's gross domestic product (GDP) expanded by a record 8.5 percent q-o-q in the third quarter, compared to a preliminary estimate of an 8.2 percent q-o-q growth, reversing a 9.8 percent q-o-q plunge in the second quarter. In y-o-y terms, the German economy shrank by 4 percent in the third quarter compared to a preliminary estimate of a 4.3 percent tumble and after a record contraction of 11.3 percent in the previous quarter. 

Meanwhile, the survey released by ifo Institute showed that German business sentiment deteriorated less than forecast in November. The Ifo Business Climate indicator for Germany fell to 90.7 in November 2020, from a downwardly revised 92.5 in the previous month (originally 92.7). Economists had forecast the index to drop to 90.1. The November decline was largely driven by a more pessimistic view about the future (the expectations index fell to 91.5 in November from a revised 94.7 in October). At the same time, the assessment of the current situation was little changed in November (the current conditions index came in at 90.0, down marginally from 90.4 in October).