U.S. Dollar Down Again as Optimism Reigns, For Now


U.S. Dollar Down Again as Optimism Reigns, For Now

MAY 18, 2021

The U.S. Dollar fell to a four-month low this morning as optimism has suddenly overtaken markets. 


After reaching record highs, stocks became volatile and started going down in recent days, but a combination of global re-openings and hunger for yield is giving risk-appetite a major opening. U.S. data continues to come in below expectations, however, with Housing Starts for April contracting more than expected and Building Permits expanding by only half the estimate. We will see how today goes in regard to Congressional and White House negotiations over President Biden’s ambitious spending plans.

We shall see how much the dollar can move today as geopolitical issues brewing, particularly in the Middle East, create a sense of worry that could turn everything around. Traders and investors await more Fed officials speaking at events tomorrow and to get the chance of seeing what the Fed Minutes from the last meeting produced. At the time of writing, U.S. Dollar is down by over half a percent all across the board.

What to Watch Today…

  • No major events scheduled for today

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The Euro is gaining today based on the positivity surrounding markets as Italy and other previously shut nations get restrictions lifted. Curfews, no outdoor dining, and all kinds of measures are basically gone in June after having been declared because of the botched vaccine campaign. Reality is better now, and progress is what is expected moving forward since Gross Domestic Product figures did indeed confirm a contraction of (-0.6%). Consumer Price Index figures tomorrow and Purchasing Managers Index on Friday.


The Pound is growing stronger despite some concerns about economic growth. Although Sterling keeps rising, members of the Bank of England are starting to think the economy needs even more stimulus than previously thought and one Monetary Policy Committee member brought up how negative interest rates could be tools to discuss later.

Nevertheless, the U.K. has vaccinated a lot of its population by now, which has allowed most services sector businesses to be re-opened. While we feel there is due anxiety over the post-Brexit trade that is not making everyone better off, we cannot battle against the momentum other majors may experience against the buck as the reflation narrative tries dominating.