Dollar Gains For First Day in Five

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Dollar Gains For First Day in Five

MAY 19, 2021

The U.S. dollar is stronger this morning as risk-sentiment continues to take a hit on inflation fears. 

Overview

If the move holds, it will be the first day of dollar gain in five days.  The Bloomberg Dollar Index is near a three-year low. Nasdaq futures are seeing the brunt of the selling pressure as technology stocks would be hurt the most by rising rates.  Rising Covid cases in Asia have also soured sentiment.

There is not much in the way of economic data on today’s docket so the greenback is likely to enjoy gains as Treasuries, commodities, and equities look to have a down day.

Later this afternoon, the Federal Reserve will release the minutes of their last FOMC meeting.  However, that meeting was held before the recent surprisingly low jobs creation data and higher inflation pressures. Therefore, the release could end up being a non-event.

St. Louis Fed President James Bullard and Atlanta Fed President Raphael Bostic will speak at separate events later today.


What to Watch Today…

  • Fed minutes at 2 p.m.

View Economic Calendar

EUR  

The Euro has dipped in early trading as risk-off trading has allowed the greenback to regain some of its losses.  Nevertheless, the Euro remains near its strongest level since January against the beleaguered dollar.

Economic data confirmed Eurozone GDP matched the previous reading of -1.8%. The data was disappointing but not unexpected.

The Euro is bouncing off the overnight lows on headlines that the EU is moving closer to removing its international travel restrictions.  France announced it is set to open borders for vaccinated U.S. citizens on June 9th.   In addition, the European Commission’s Commissioner of Home Affairs Ylva Johansson said that the European Union endorsed the Commission’s proposal to update EU recommendations on travel from third countries which will lift restrictions between EU countries.

CAD  

The Canadian dollar was slightly lower overnight, moving in tandem with the price of oil.  All eyes are on this morning’s inflation data.  Canadian CPI accelerated to 3.4% year over year in April, according to Statistics Canada. Economists estimated prices would rise 3.2%.  The loonie’s knee-jerk reaction was to gain against the U.S. dollar but that move quickly reversed.  USD/CAD could be set for a volatile session.

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