Fed Presser Biggest Risk Event of Q1
MARCH 17, 2021
The U.S. Dollar is trading in tight ranges ahead of the much-awaited Federal Reserve meeting and press conference scheduled today at 2 PM.
Equity markets are taking a breather as global observers seek guidance from Chairman Jerome Powell now that the monetary policy front is being complemented with a rescue package from Congress. As stimulus reaches individuals, investors are looking for clear indications and statements that solidify the belief in leaving policy unchanged until 2023, basically to allow the economy to get hot in an easy-money environment. Any hesitation could shock markets and create lots of volatility.
For now, the buck is enjoying momentum against Mexican Peso from good developments in the U.S. COVID fight as well as the potential for dwindling oil prices. The International Energy Agency (IEA) said that demand for oil is likely to decrease long-term while oil prices should be at their pre-pandemic level by 2023. Their report certainly pours cold water on big hopes for $80.0-100.0/barrel.
There are a few items overseas that the U.S. will also turn the focus on as the Senate discusses the current semiconductor shortage crisis as well as the ongoing issues with vaccine rollouts in Europe. Housing Starts and Building Permits readings for February were awful, with the former contracting by (-10.53%) when only a slight decline of (-1.3%) was expected. There appears to be no need to think the economy is flying.
What to Watch Today…
- No major events scheduled for today
The Euro headed downward slightly as news continues to develop in regard to the problems of the AstraZeneca vaccine. The European Medicines Agency is set to give the green light to continue using the vaccine as it feels that the good elements outweigh the bad. With the major nations of Germany, France, and Italy stuck in comparison to other regions, there is little sense in hyping the Euro. We shall see what this means for the short-term and long-term recovery, but it is clear the EU has to step it up and there is no merit for Euro appreciation.
The Pound is moving in very tight ranges as the U.K. deals with trading concerns ahead of tomorrow’s Bank of England meeting. There is now legal action from the EU against the British for allegedly not complying with the established agreement over Northern Ireland controls. A very hot topic of debate during the 5-year divorce process, N.I. is once more creating difficulties for a smooth trading relationship to ever remain after Brexit. This could be the very start of an unraveling of trade bumps that will need to be fixed as both parties face tremendous challenges because of the pandemic as well.