Dollar Rises as COVID Reigns Again

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Dollar Rises as COVID Reigns Again

JANUARY 11, 2021

The U.S. Dollar is rallying this morning as risk-taking hits the brakes worldwide based on a lack of confidence globally as COVID-19 remains a major thorn in the free movement of goods and people. 

Overview

Stock exchanges around the world are seeing investors worry about “bubble-burst” talk since equities and other riskier assets have become valuable and the reasoning behind it is starting to seem overdone. The virus continues to force governments and regions to take on social-distancing measures. Commodities and crypto are taking a backseat after weeks of sustaining major gains as well. Overall, appetite just coming down.

We do not have any major economic data points to assess today, but later this week we shall get a better overall economic picture of the European situation. FX flows seem to be about the buck taking back from all peers across the board. We shall see how any political moves might also make waves in markets, but we view any action will have limits and not make a difference to the transition of power coming up.


What to Watch Today…

  • No major events scheduled for today

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EUR  

The Euro-zone will see plenty of data to digest at the end of the week, but the focus now is on leaders such as Germany’s Angela Merkel who are urging their populations to take measures seriously and help in fighting the spread of the disease. Although European and global markets enjoyed a run because of the hope established by vaccinations, the distribution has not been ideal and cases continue to show a steady rise. European Central Bank leadership will speak this week and Christine Lagarde will have a conference on Wednesday. Ultimately, it is difficult to predict much as the medical threat to our lives and the economy remains strong.

GBP  

It is the same story out of the U.K. today, where the focus on economic progress is halted as the coronavirus damage does not cease. Prime Minister Boris Johnson is in the same situation as the CDC and EU with people refusing to adhere to restrictions. Medical authorities are telling the population that vaccines will take a few months and then life can be freer, but no cooperation is making life difficult.

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