Low Volatility Keeps Dollar Strong for August
AUGUST 13, 2021
The U.S. Dollar is once more trading within tight ranges against its peers as markets across the world are calm.
Exchanges in the U.S. are still around their record highs while European equities are enjoying their longest winning streak since the year 1999. It was then the Euro became an established coin for most of the countries using it today. However, the Euro has lost ground in the midst of all this investor enthusiasm in August, already over 1.0% down thus far in August.
Part of what is keeping markets flowing upward is the realization that although the Delta variant is doing documented damage, it is hard to get people to agree to want to go back into lockdown a second time around. Although some expectations and confidence have gone down per economic indicators, people are still trying to be active out there.
Import and Export Prices for July indicate that our exports are more expensive, but imports are less costly. Nothing giving signs of outrageous inflationary growth. We shall see at 10 AM how confident consumers are from the University of Michigan Consumer Sentiment Survey.
What to Watch Today…
- UM Wolverines Consumer Sentiment Survey 10 AM
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The Euro has fallen in August as the lull of summer seems to be benefitting dollar prospects. Volatility is very subdued, and movements limited, thus we shall see how the struggle to pass a spending bill in the U.S. affects FX flows. Recent data pointing at progress in the U.S. has made some Fed officials comment on the likelihood of needing to taper, but that could change.
Euro is weakened at the moment, but in the next few months, the shared currency could find sources of strength as inoculations continue to climb and activity increases with elections also in the horizon for September. Anyone out there needing Euros should consider this a good quiet time to hedge ahead.
No major data or announcements out of the U.K. are keeping the buck afloat against it as a mix of good and negative headlines have kept the Pound down by 1.0% this month. While the U.K. is trying to revamp activity, especially as its Premier League begins this weekend with spectators back on the stands, there are concerns brewing about traveling and how to prevent Delta from doing more.
Nevertheless, people are out there, hard to manage their will to take risks, thus this second half of August will be a test to see if the medical situation can get any worse or sees a drop