Dollar Continues to Rise; Euro Breaks Below Key Level

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Dollar Continues to Rise; Euro Breaks Below Key Level

FEBRUARY 04, 2021

The U.S. Dollar is up again this morning, with notable gains versus the Euro.

Overview

The common currency fell to fresh lows not seen since early December, despite a lack of data from the Eurozone. If EUR/USD can push below a major psychological level, the dollar could see more significant gains. The Bloomberg Dollar Index is up 0.3% and is at its highest level in a month.

Equity futures are fluctuating between gains and losses this morning but are seemingly not affecting the greenback’s rise.   Eyes will continue to be fixated on Washington and hopes of an upcoming fiscal stimulus package.  President Biden appears unwavering on his demand for stimulus checks to be $1400 to individuals. However, the earnings thresholds to qualify for the check may be negotiable to gain some GOP support.

Durable goods and factory orders are due out at 10 a.m.  There are also a number of Fed speakers and corporate earnings on today’s docket.  Tomorrow’s, Non-Farm payroll print remains the largest risk event on the schedule.


What to Watch Today…

  • Durable Goods Orders at 10 a.m.

View Economic Calendar

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Our Senior FX Trader & Strategist, Juan Perez, talked with LeFonti International TV about the Fed in the limelight and Biden’s pandemic aid plan.

AUD  

The Australian dollar was one of the few major currencies to register gains versus the U.S. dollar overnight.  The half a percent move higher came after a report from the Australian Bureau of Statistics showed that the nation’s trade surplus accelerated, led by a 21% surge in iron ore exports.

An uptick in commodity prices, in general, have allowed commodity-based currencies to limit losses to the greenback over the past few weeks.  Oil, for example, has continued its march higher.

GBP  

The British pound has experienced the sharpest moves so far this morning.  The sterling lost almost half a percent overnight ahead of this morning’s Bank of England meeting.  However, the sterling jumped nearly 100 basis points in under an hour.

As expected, the Bank of England voted unanimously to hold their current bond purchase program and interest rates unchanged.  While the central bank did warn banks to start preparing for the possibility of negative interest rates, the BOE pushed back on the idea that negative rates were imminent. Adding fuel to the sterling’s early morning rise were rosy comments about the likelihood of a quick rebound in the U.K. “in light of a bold vaccination effort.” The central bank’s optimistic tone on negative rates and future growth has allowed the sterling to rebound nearly a percent from its overnight lows.

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