Dollar Rises, Risk Sinks on J&J Vaccine Concerns

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Dollar Rises, Risk Sinks on J&J Vaccine Concerns

APRIL 13, 2021

The U.S. dollar is stronger this morning as global risk sentiment hit a rough patch.  

Overview

European equities and American futures dropped early this morning on the news that the Food and Drug Administration will recommend pausing the use of the Johnson & Johnson Covid-19 vaccine following a number of blood clot issues.  The drop in risk sentiment is likely going to be viewed as a “knee jerk” reaction as the production of other vaccines remains high.  Nevertheless, the early pop in the dollar is undeniable.

The biggest risk event of this week was this morning’s release of the consumer price index.  March CPI rose 0.6%, which is slightly higher than estimates of 0.5% and up from 0.4% in February.  Yearly CPI rose 2.6%, higher than the 2.5% expected.  The so-called “core” reading was also higher.  Central Bank policymakers and the White House have contended that the spike in inflation pressures will come back to earth after a temporary acceleration.  The yearly print is also likely skewed due to the “base effects” of the lockdowns early last year.

The U.S. will hold a 30-year bond auction at 1 p.m.  If spreads start to widen, expect the dollar to improve further.   There are also three Fed speakers on today’s docket.

Bitcoin traded to an all-time high earlier this morning.


What to Watch Today…

  • 30-year debt auction at 1 p.m. 

View Economic Calendar

EUR  

While the Euro was able to gain during yesterday’s session, the common currency gave back all of those gains overnight as European stocks briefly turned negative.  The common currency found support after strong retail sales yesterday but the move proved to be short-lived.  The German Zew investor confidence survey disappointed, putting added downward pressure on the Euro.

Despite the seesaw ride this week, EUR/USD is almost exactly at the same level as Friday’s close.

CAD  

The Canadian dollar is among the currencies falling following the Johnson & Johnson news. The loonie is down nearly half a percent against the U.S. dollar even as the price of crude oil ticked higher. Canadian dollar and other commodity currency traders will eagerly await OPEC’s latest monthly report which will explain the decision to increase production at its last meeting. There is no major Canadian economic data due out today so USD/CAD is likely to continue to flow with the prevailing risk sentiment.

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