European session review: EUR weakens, weighed down by bigger-than-expected drop in German business morale, Italian political turmoil and slow vaccine rollout in EU

EUR fell slightly against most of its major rivals in the European session on Monday, weighed down by a bigger-than-forecast decline in German business morale, political uncertainty in Italy and worries over slow vaccine rollout in the EU.

The survey from ifo Institute revealed that German business confidence fell to a six-month low in January as the second wave of coronavirus halted an economic recovery. According to the report, the ifo Business Climate indicator for Germany decreased to 90.1 in January 2021 from an upwardly revised 92.2 in the previous month. This was the lowest reading since July 2020 and below economists' forecast of 91.8. Companies assessed their current situation as worse than last month (89.2 versus 91.3) and their expectations were also more pessimistic (91.1 versus 93).

The situation in Italy's politics remains uncertain ahead of, possibly, a key vote in the Italian Senate later this week. There is also the risk that Prime Minister Giuseppe Conte can resign in an effort to form a stronger government that can count on a broader majority.

The Financial Times (FT) reported that the EU’s vaccine procurement strategy was under scrutiny as the region's member states struggled to roll out rapid vaccinations in the first weeks of 2021. According to FT data, the block is languishing at under two doses per 100 residents compared to 10.2 doses per 100 residents in the UK and 6.6 per 100 in the U.S. Overall, at least 65 828 776 doses of coronavirus vaccines have been administered around the world, data from 64 countries show. The widening gap has raised anxiety in the EU, especially as already strained supplies of vaccine have suffered further delays.