Dollar Slips on Risk “Relief Rally”

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Dollar Slips on Risk “Relief Rally”

JUNE 21, 2021

After getting pummeled the second half of last week, the risk is experiencing a modest “relief rally” this morning.

Overview

The uptick in stocks has correlated to a sell-off of the U.S. dollar.  While the Bloomberg Spot Dollar Index is down 0.2% this morning, the greenback is holding near the best rates in months versus nearly all its G10 counterparts.

This week’s docket is jammed packed with Fed speakers, many of whom will speak for the first time since last week’s revelation that policymakers see not one, but two interest rate hikes during 2023.  St. Louis Fed President James Bullard and Dallas Fed President Robert Kaplan are speaking this morning, followed by New York Fed chief John Williams this afternoon.  Fed Chairman Jerome Powell will testify before the House tomorrow morning.

The economic docket is light, with only the Chicago Fed National Activity index due to cross the wire.

What to Watch Today…

  • No major economic events scheduled for today

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EUR  

The Euro has recovered some of its losses from last week but remains well below its recent highs.  Indeed, EUR/USD is 2% lower from this time last week.  There are increasing fears that the so-called “Delta” variant of the coronavirus that caused the U.K. to delay its reopening is starting to wreak havoc in parts of the Eurozone as well which could limit the common currency’s attempt to regain more losses.

European Central Bank President Christine Lagarde is scheduled to speak in front of the European Parliament at 8:30 a.m. EST.

CAD  

The Canadian dollar has gained on broad U.S. dollar weakness. The loonie gained nearly half a percent against its American rival after falling drastically during the second half of last week.  The election of conservative cleric Ebrahim Raisi in Iran over the weekend diminishes chances for a quick resolution to nuclear talks. That means that Iranian oil will remain on the sideline of the international market.  The results have allowed the price of oil to pop higher, and the Canadian dollar has taken advantage.

The Australian and New Zealand dollars both rose over half a percent against the dollar, recovering from last week’s sell-off as a result of a pickup in global risk appetite.

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