Steady Greenback on Inauguration Day

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Steady Greenback on Inauguration Day

JANUARY 20, 2021

The U.S. Dollar is trading in mostly tight ranges ahead of the U.S. Presidential Inauguration today at noon. 

Overview

The U.S. Dollar is trading in mostly tight ranges ahead of the U.S. Presidential Inauguration today at noon. There was slight positivity in the trading sessions overnight, however, investors and traders will now have to deal with the uncertainty of congressional politics as yesterday’s confirmation hearing for Janet Yellen displayed the level of opposition to new spending from the incoming administration. The Treasury Secretary to be explained her faith in a more robust fiscal intervention to handle the effects of the pandemic.

Nevertheless, while speaking to the Senate Finance Committee about the up coming $1.9 trillion planned stimulus bill, several Republicans stated that this was not the time for such ambitious taxes and expenditures. Next few months will be crucial, but pressure is on the government to act so the Senate will need to figure where to get its 60-40 majority to swiftly pass.  Yellen’s optimism, it should be noted, was initially hurting the buck, something Yellen achieved at times when speaking in her previous role in the Fed. We shall see if the greenback sees much action without data, but potential for some surprises as Biden announces executive action plans on his first day in office.


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EUR  

The Euro seems undecided at the moment in whether to climb some or slide as the Euro-zone is dealing with a mix of good and bad news. The bad first is obvious: COVID-19 keeps causing record deaths and hospitalizations, which are ravaging the German population. Vaccines continue to be rolled out, but it is clear that in December gatherings affected the infection as well as the deadliness rate.

On the other hand, Italy is providing some much-needed hopes in political stabilization as Prime Minister Giuseppe Conte survived his confidence vote with better support than expected. His time now will have to be dedicated in rebuilding a coalition as best he can and pass a budget to spend and rebuild the country with rescue funds.

GBP  

The Pound rose almost half a percent this morning based on better-than-expected data from December as it applies to inflationary growth. Sterling was the biggest mover among the majors as vaccine distribution success thus far keeps improving its value, but it as aided by December Producer Price Index figures showing better growth than predicted.

PPI Output for the month had a 0.3% uptick and Consumer Price Index increasing by 0.6% in December brought the yearly overall average to 1.4%, higher than the 1.3% estimate. With a combination of the Bank of England knocking off speculation over negative interest rates, medical breakthroughs, and good data are helping keep GBP afloat even as Brexit trading issues are arising.

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