Dollar Gains Modestly; Commodity Currencies Slump
APRIL 27, 2021
The U.S. dollar is slightly stronger this morning, it’s the first gain in three days.
Nevertheless, the greenback remains within a few tenths of a percent from the two-month low it reached yesterday morning.
Global equities are mostly lower today, benefiting the traditional safe-haven dollar. American shares gained yesterday, recouping losses from last week. Bloomberg News points out that four out of five S&P index companies that have reported earnings have either matched or beaten expectations. Earnings season will continue this week. With big expectations, equity moves to the upside may be limited, but a few misses could send stocks lower and benefit the greenback.
Later, the Conference Board’s consumer confidence survey is expected to show that confidence rose for the fourth consecutive month and has reached its highest level in over a year. Investors will then shift their focus to the conclusion of the Federal Reserve’s interest rate meeting tomorrow afternoon.
What to Watch Today…
- Consumer Confidence at 10 a.m.
The Euro touched a two-month high against the U.S. dollar yesterday but was unable to extend its rally overnight. EUR/USD dropped 0.2%. The Euro’s strong move in April has erased its fall from March. The question now becomes, can the Euro break higher and test its year-to-date highs? Or will Euro lose steam and trend lower?
EUR/USD is 2% lower than its YTD high on January 6th and 3% higher than its YTD low from March 30th. From this perspective, it is easy to argue that EUR/USD is in the middle of its recent ranges and might not experience a sharp move without an unforeseen catalyst.
Curiously, the commodity-based currencies are all lower this morning even as most commodities extended gains. Copper extended its rally, and the price of oil is up over a half percent today. Nevertheless, the New Zealand dollar was the worst-performing G10 currency overnight, falling half a percent. The Aussie dollar was also 0.4% lower. Global equities are a bit lower this morning, which is likely the reason these global growth-sensitive currencies are selling off near their recent highs.