Buck Has Strongest Quarter in a Year
MARCH 31, 2021
The U.S. Dollar is sticking to mostly familiar ranges across the board with little movement in markets as we await the details of an infrastructure spending plan to be revealed by President Joe Biden later this afternoon at 4:10 PM.
This morning we do have a few data indicators in the form of the Chicago Purchasing Managers Index for March at 9:45 AM and February’s Pending Home Sales at 10 AM. The Chicago region got some attention last week as a survey of business leaders indicated a decline from months prior, worrisome as infections are going down while vaccinations rise.
On the other hand, markets are starting to worry somewhat about the quick turnaround in housing, which flourished last year in the midst of the most concerning time for the pandemic. A contraction is expected, we shall see how bad it is or if it surprises with expansion. ADP Employment for March came in almost as expected and more than four times the February numbers with 517K payrolls added over the 550K expected.
The buck is about to close its strongest quarter in a year. Meanwhile, treasury yields are at their highest level in 14 months. A gauge of Chinese Manufacturing activity revealed March saw a resurgence. Perhaps this could aid the risk-on sentiment and start hitting the greenbacks advancement, but for now, the U.S. gives good reason its steadiness.
What to Watch Today…
- Chicago PMI 9:45 AM
- Pending Home Sales 10 AM
The Euro, as documented in recent days, is trading around its weakest point since November due to the combination of slack in vaccination campaigns, economic sluggishness, and a determined European Central Bank that will not change its loosened monetary policy any time soon.
There may be more commentary from ECB officials later today, likely highlighting the need to act before scheduled meetings and the importance of using a special pandemic purchasing program, PEPP, to keep the easy money flowing. Today’s inflationary growth data as Consumer Price Index for the Euro-zone came in slightly lower than expected at 1.3% when 1.4% was expected. It will take good data and developments in the COVID front to aid Euro value going into Q2.
The Canadian Dollar ends the month strong although it had been much better mid-month when it reached its best levels against the buck since the start of 2018. While oil prices have aided somewhat, the main thing propelling CAD to multi-month highs has been a steady economic recovery, good handling of the pandemic, high numbers of vaccines in stock, and a better situation in the United States helping revamp trade and production.
On the COVID front, Canada refused to use the AstraZeneca vaccine for those under 55 years of age, a decision that is troubling medical professionals in the Euro-zone. The Bank of Canada will meet on April 21st and we shall see if their positive tone aids CAD value further. Thus far in this pandemic period, the BOC has been characterized by being less dovish than the rest.