Buck in tight ranges, better employment in U.S.

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Buck in tight ranges, better employment in U.S.

JULY 02, 2021

The U.S. Dollar currently has a half percent gain for the week, per the Bloomberg Dollar Spot Index, as turbulent markets seek guidance for the remainder of the year. 

Overview

June witnessed how inoculation across the country and improved economic indicators made the greenback an attractive buy in comparison to emerging market currencies and other majors, whose countries are still struggling in a big way from the pandemic. We shall see if there is any recovery rally for other currencies as OPEC+ meeting tensions affect oil prices and perhaps there is a resurgence in optimism over demand for all other commodities.

Today’s Employment Situation data painted a better picture domestically as Non-Farm Payrolls increased by 850K over the 720K expected and wages increased as forecast. The Unemployment Rate rose from 5.6% to 5.9% which makes sense as the stimulus goes away, and places start to re-open. We shall see if the buck ends the week without movement ahead of a major 4th of July holiday, which many hope is a completely different story from last year’s.

What to Watch Today…

  • No major economic events scheduled for today

View Economic Calendar

EUR  

The Euro dwindled this week after a rough June. Currently, markets are digesting comments by Christine Lagarde, ECB President, regarding the lessons learned in 2020. At the moment, the ECB looks unlikely to taper or get away from any aid to the financial environment for the next year or so.

We will see a lot of volatility going into the second half of the year as we start gauging the economy’s ability to sustain growth and high levels if possible at all. Unlike the Fed, we predict more consensus from the ECB members, who likely will not propose tightening up things anytime soon.

GBP  

Sterling has lost its shine and there could be more concern down the line as the U.K. faces economic challenges post-Brexit. British officials have essentially given up on working a deal for financial equivalence and clearing houses across U.K/EU.

The conclusion comes from the fact that the EU is not trying to boost up its own financial system so basically, they are not competitors in a different way. Bank of England’s Andrew Bailey likely will be concerned that Purchasing Managers Index figures had to be revised downward, a sign that original readings may have been too rosy to be true.

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