Buck Dwindles as Markets Find Rhythm

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Buck Dwindles as Markets Find Rhythm

MAY 06, 2021

The U.S. Dollar started to slip overnight as a result of good sentiment across global markets, which continue to see a rise for oil and other commodities. 

Overview

Indeed, there is positivity in the air as the economic outlook for the globe seems plausible regardless of the setbacks with COVID variants infecting more people in certain regions. Additionally, the talk in markets about concern for inflation can die off with another important Fed official, Boston’s Eric Rosengren, saying that we are far away from having to taper any bond purchases much less start thinking about interest rate hikes. The Fed’s established way of thinking of wait-and-see for the next two years seems hard to break.  

The Antipodean currencies of AUD and NZD along with ZAR (South African Rand) continue to rise as iron ore as well as steel futures reached a new record based on demand from a very active China. Meanwhile, European and American drugmakers are discussing the possible waiving of intellectual property on vaccines that could allow for reproduction elsewhere and hopefully a quicker global inoculation. We shall see where the day takes in FX flows after this morning’s release of U.S. Jobless revealed that Initial claims expanded less than expected, 498K instead of 528K, but Continuing Claims were higher than estimated. All eyes tomorrow will be on the Employment Situation.


What to Watch Today…

  • No major events scheduled for today

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EUR  

The Euro rose after days of not going anywhere based on the momentum markets are experiencing. Regardless, Euro Stoxx 600 failed to squeeze a gain yesterday as some earnings disappointed, particularly automakers, which fell behind banks. There is a new wave of vaccines coming, which will help the global vaccination effort and allow Europe to open its shores for commerce and tourism.

The G-20 nations are discussing the potential for issuing COVID-clearance passports to get things going. There have not been many items for discussion this week as the EU continues climbing out of a tough lockdown from the third wave.

GBP  

Pound Sterling is quiet as Bank of England Andrew Bailey continues his press conference at the time of writing. The BOE’s policy meeting did not produce any major headlines other than a slowdown in the pace of weekly purchases, yet the size of assets to be purchased will be left unchanged. Officials are highly optimistic that Gross Domestic Product will grow significantly. Although you are getting a bit of confidence from the BOE, the Pound is being held back by the potential for a Scottish Independence vote coming soon if the Nationalists sweep Scotland elections.

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