Dollar Weakening with More Stimulus Speculation


Dollar Weakening with More Stimulus Speculation

JANUARY 19, 2021

The U.S. Dollar returned from the holiday weekend with some weakness across the board as markets begin with optimism for a week of transition.


Today, investors are buying into the “Reflation” narrative, believing that more robust stimulus is coming, particularly in the U.S., that will give every sector a resurgence and lift markets higher. The first step into making such hopes a reality comes in the form of newly appointed Secretary of the Treasury, former Fed Chair Janet Yellen, who will speak about the need for stepping up fiscally during her confirmation hearing to the Senate Finance Committee. Tomorrow, Washington is preparing for Joe Biden’s inauguration as President of the U.S.

Overnight, the Bloomberg Dollar Spot Index started slipping as a gauge of confidence picked up in Germany while traders start looking at EU plans for commitment to green energy. We shall see if the good news can actually continue as weeks tend to close out with something usually dragging momentum. Meanwhile, in Asia, things are looking better economically with a spending spree causing the highest point for the Hong Kong Hang Seng Index exchange since May of 2019. We shall see how things pan out here Housing wise and in terms of Purchasing Manager Index on Thursday and Friday with a slew of data.

What to Watch Today…

  • Janet Yellen Confirmation Hearing 9:50 AM

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The Euro climbed a bit as a result of better times expected ahead for a continent primarily shut in the past six weeks. The ZEW Institute in Germany revealed in its confidence survey that German investors feel more confident than expected about what is to come in 2021.

Furthermore, the Euro-zone needed some stability from Italy as Prime Minister Giuseppe Conte is going through some confidence votes and won an important one from the lower house before he shows up in front of the Senate. After the political party “Italy Alive” pulled away from the coalition to have a government, Conte is working to survive as the leader to form another alliance and avoid elections.


Pound Sterling is finding support as the Chancellor of the Exchequer tries to work on taxes and a budget. More importantly, Britain is succeeding in vaccinating its population as it competed for vaccination of 5.9% of the nation last week. We shall see what other news items come out of England, but the main trouble in markets is COVID and if the vaccine is being given, the global outlook will improve and keep the pressure on the buck.