Second Half of 2021 Starts with Strong Buck
JULY 01, 2021
The U.S. Dollar continues to trade in favorable ranges, in fact, about to close its best monthly performance since March 2020 ahead of the much-awaited 4th of July holiday.
Assessing the current state of COVID, we certainly see an advantage for the U.S. and North America while worrying a bit about the ongoing struggle with flare-ups in Asia. The new Delta variant discussed in headlines news is also said to be quite contagious, yet pharmaceutical companies behind the vaccines are saying their formulas will work effectively for those fully vaccinated.
Boosts may be needed down the line. Ultimately, embracing the reality that we will be dealing with COVID-19 for a while is what is happening across markets, which are cooling off after seeing some of their best performance in two decades.
Oil prices touched $75.00/barrel for the first time since October as OPEC+ members ready themselves for an output discussion in the midst of diplomatic frustrations Iran is having ironing out a nuclear deal, which would signify less economic sanctions and ability to produce. Because of this and supposedly pent-up demand that will materialize in the second half of the year, futures are going up, which could eventually boost other petro-currencies.
Chairwoman Christine Lagarde as well as the We shall see if today makes any waves as markets eagerly await statements from the European Central Bank as well as the details of our Employment Situation for June.
What to Watch Today…
- No major economic events scheduled for today
The Euro slid big time in June, by 3.2%, losing value based on the confidence exhibited by the Federal Reserve and the overall better situation in terms of activity in comparison to continental Europe and beyond. Indeed, the U.S. set goals for inoculation, and efforts for the very start of the year resulted in major gains in confidence as well as performance in indicators.
Clearly, Euro was overvalued and while we shared that thought, its weakened state is beyond what we thought possible for June. Now, tons of data must show that progress is there because otherwise, the ECB will have no room for years to tighten their monetary policy in any way. Volatility will be incredibly high as we move forward with the rest of 2021, a year for patchy recovery it seems.
The Pound also fell in June by over 3.0% and we absolutely agree it was overvalued and has room to go down further. Purchasing Managers Index figures for the manufacturing sector in June came in just below expectation but demonstrating a boost close to expectation. The struggles in the larger continent and post-Brexit concerns could play bigger roles in affecting the value of the Sterling. Swings will come because risk appetite comes out of nowhere nowadays.