Markets Calm as Delta Demands Attention

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Markets Calm as Delta Demands Attention

AUGUST 10, 2021

The U.S. Dollar is trading in familiar ranges as markets hold their breath on what could be a major step in the recovery and growth process here in the U.S. in the form of a large spending bill.

Overview

President Joe Biden seems confident that the bill will have enough support in the Senate. Recent economic indicators in the U.S. suggest there is some advancement in labor, so perhaps this bill will only boost economic re-strengthening, but there are many concerns surrounding the nature of the Delta variant and if non-essential travel needs to be ceased.

In terms of monetary policy, the U.S. may be starting to tilt towards tapering sooner rather than later. Boston Fed President Eric Rosengren and Atlanta Fed’s Raphael Bostic made comments echoing the message by Fed Vice Chair Clarida that it may be time to reduce purchases in the fall. We shall see if indeed this becomes more of a wide opinion and Powell changes his tone. Per the Fed Chairman, there is room in the economy to delay the taper. Thus far, it seems to be helping the buck stay steady. 

What to Watch Today…

  • No major economic events are scheduled for today

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EUR   

The Euro shed some more value overnight as the infection rate is worrying governments who are now reconsidering border controls and a stop to non-essential travel. German authorities are struggling to cope with the number of infections and want to focus on working on the unvaccinated.

Additionally, Germany is preparing for general elections in September and is worried about how to go about the vote. Business-wise, investor expectations have come down greatly as fewer investors see growth and more potential for slowdown with the virus variant.

GBP  

Sterling is trading in quiet ranges as London deals with budget talks and the delta variant creates the need for reinforcing some safety measures. Prime Minister Boris Johnson wants to have ample ability to spend, much like in the U.S., with hopes to boost economic growth via government investment and infrastructure updates.

We shall see if there is more movement on Thursday as GDP numbers for Q2 are revised.

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