Buck Pulled in Different Directions, Markets Tense
MARCH 29, 2021
The U.S. Dollar is trading in a mixed direction this morning, seeing some commodity-based currencies rise with news that the gigantic ship that was stuck in the Suez Canal has been dislodged and is now in the process of moving through.
Last week’s unique accident put all kinds of global producers and suppliers in a bind with the pandemic already making commercial trade difficult enough.
We shall monitor just how much of a boost this will be to emerging currencies as well as the Antipodean tender of “Aussie” and “Kiwi.” Oil prices resurged, giving signals to markets that there will be demand and positive momentum going into this week. Long-term prices could be affected by more production from Iran and other nations whose economies are not yet expanding in the midst of the medical crisis. Over the weekend, it was established that while the U.S. is making progress in inoculation efforts while the rest of the world struggles with infection needing further safety measures.
We will get a clearer look at economic activity as we expect a deluge of data by end of the week. Global markets this morning are a little tense based on the unprecedented sell-off that occurred Friday caused by Tiger Management. Speculators are wondering if it is a sign of a correction to come. Meanwhile, we shall see if the buck manages to maintain strength as a safe-haven since COVID cases keep popping elsewhere.
What to Watch Today…
- No major events scheduled for today
The Euro fell last week primarily as no positive developments in the COVID front are suggesting a much longer battle than anticipated against the pandemic. The effects have been clear with ongoing contractions and the European Central Bank has shown interest in reducing the risk of higher bond yields as this could impact inflation and thus slow down the recovery.
While not much has changed in describing the Euro-zone in the past few weeks, the problems are now well-known so any efforts or items that look like resolution could give some life back to the shared currency. Any deterioration may not be a surprise, but it would add worry about the continent’s well-being.
While there is good news in the U.K. as the Moderna vaccine is added to their medical arsenal, the relationship with the EU may have another ugly chapter to add this week. Reports from the U.K. are saying that the Bank of England feels too many banking positions are heading to Europe and will demand lenders to ask for approval prior to relocating any more jobs.
This only adds to tensions as the imports of vaccines may be compromised after last week’s attempts by both EU and U.K. to mend those disagreements. Sterling found support, especially after data showed February was not as sluggish as expected, but we shall see swings as the diplomatic mishaps continue.