European session review: USD continues to appreciate as risk sentiment sours

USD rose against its major rivals in the European session on Thursday as investors' risk sentiment remained dented by concerns about global vaccine rollout and vaccine-fueled economic recovery.

The latest reports about vaccine development showed that the authorities of the developed economies grapple with a slower-than-expected vaccine rollout due to supply shortages. They demanded from the vaccine maker to get all the COVID-19 vaccines they had ordered and paid for. Earlier this week, the European Commission proposed to create a register of vaccine exports in order to monitor where doses are being sent. This raised worries over possible “vaccine protectionism”.

At a post rate decision press conference on Wednesday, the Federal Reserve Chairman Jerome Powell provided a cautious outlook for the U.S. economy, underscoring the challenges faced in vaccine distribution and job creation for the Biden Administration. "The economy is a long way from our employment and inflation goals," Powell said, "and it is likely to take some time for substantial further progress to be achieved." Meanwhile, the European Central Bank's (ECB) chief economist Lane said that he expected the EU's economy to recover to pre-pandemic levels by the end of the summer of 2022.