Geoffrey Smith 

Investing.com – The euro fell slightly in Friday’s trading but was well supported by a strong selloff in U.S. stocks on Wednesday, which dampened risk appetite across the globe.

At 3:00 AM ET (0800 GMT), the Greenback Index, which compares the greenback to a basket from advanced-economy currencies, had fallen 0.1% to 95.67. However, it was still on track for 0.5% growth over the week, which has been marked by worries about inflation, higher rates and later signs of an economic recovery for the U.S. due the Omicron version of Covid-19.

The initial jobless claims rose to the highest levels in three months last Wednesday, while the earnings woes of the bank sector and Netflix (NASDAQ:), on Thursday cast doubt on the current growth story of the past two years.

Risk appetite is also limited by geopolitical issues. U.S. President Joe Biden warned Wednesday that Russia could invade Ukraine. Anthony Blinken (Secretary of State) meets Sergey Lavrov, his Russian counterpart, to try and defuse this situation. Although the exchange rate remained unchanged at 76.64 dollars, it is up more than 3.5% this week.

With rising Covid cases, household energy prices, and a downturn in retail sales, the European Day got off to a slow start. GfK confidence fell to its lowest level in February and retail sales dropped 3.7% over December. Also, November’s numbers were revised downward. 

Analysts stated that the changes in purchasing patterns caused by the pandemic likely led to a shift of spending habits. Consumers were completing Christmas shopping much earlier than usual because they were afraid of shortages. It was an exceptional month for October’s sales.

James Smith from ING, an economist, said that “Total consumer expenditure may not decrease this year” due to the high level of savings and potential for further catch up in some service categories. After two years of high-quality goods spending, retail seems more vulnerable. “The latest drop in consumer confidence could be a warning sign.

As a result, the pound lost 0.2% at $1.3565. The euro was 0.4% higher. In response, the euro was 0.2% higher at $1.1362. It had lost 1.5 cents to the dollar over the past week due to a wider gap between ECB and Federal Reserve policy. In a speech delivered on Thursday by Christine Lagarde, President of the ECB, Christine Lagarde resisted calls to raise interest rates early, despite the fact that headline inflation has risen more than 5% since the Eurozone was created.