Buck Climbing Back as Covid Dampens Optimism
JANUARY 22, 2021
The U.S. Dollar could close the week even as it is attempting to cut the losses for the week as pessimism and COVID-19 worries take over the rally seen across global markets.
All around the word, COVID-19 remains an issue for international trade and travel, which is making many investors reconsider just how quickly we can recover from all this. In the United Kingdom, where we have been saying there has been good progress in vaccinating people, Prime Minister Boris Johnson warned that the lockdown measures could last into the Summer as this third wave of the virus proves resilient.
In the U.S., we will continue monitoring changes by the administration as it signs executive orders and pushes for its spending bill to be approved. Data-wise, we will get a chance to see January Purchasing Managers Index (PMI) figures at 9:45 AM. At the time of writing, currencies across the board started dropping in value significantly by an average of 0.50%.
What to Watch Today…
- No major events scheduled for today
The Euro is starting to lose some steam as growing concerns over vaccine distribution grow in the Euro-zone. Italy believes there will be delays to its program for at least a week while German authorities said they will have delays going into the next two months. Additionally, the good news politically out of Italy was quite temporary since Prime Minister Giuseppe Conte is considering o have early elections. PMIs in the Euro-zone showed expectations for January fell right in line with some expansion in manufacturing and contraction remaining in services.
The Pound is also sliding after having such a strong week because of concern the coronavirus is here to battle for another few months. Prime Minister Boris certainly believes the situation requires measures to stay in place on the population for the remainder of the quarter and beyond.
This morning’s release of PMI and Retail Sales truly disappointed as January Services and Manufacturing came in below expectation, with Services significantly down. December Sales only showed a 0.4% advance when a full 1.0% was predicted. We may start seeing swings the other way for Sterling soon as trade issues at ports also pile up.