U.S. Dollar Down in Midst of Global Re-Openings

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U.S. Dollar Down in Midst of Global Re-Openings

MAY 17, 2021

The U.S. Dollar is starting the week slightly weaker among the majors as re-openings in different regions and a sense that the economic recovery is still on its way.

Overview

Markets globally are mostly in the green with Asia being an exception as outbreaks in places such as Taiwan are sparking concern. While many are worried about the potential negative effects of possible high inflation, the real problem remains in COVID-related matters as most of the world has not inoculated at the pace we have here. Additionally, some places may have thought they could declare victory, but it has proven to be premature.

In the U.S., Fed officials are likely to maintain their tone regarding the need to relax about inflationary pressures, especially when the labor market is only now starting to show signs of coming back to desired levels. The focus worldwide is to beat COVID and get things moving, but the patchy nature of how this whole situation has been handled has left so much room for improvement. Expect talk about re-openings aiding the greenback’s main pairs as volatility also increases with the anxiety reflected in equity markets as well as supply chains struggling to meet higher demand for all physical goods.


What to Watch Today…

  • No major events scheduled for today

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EUR  

The Euro is looking positive as this week marks more restrictions being lifted across the continent. Europe is coping with diplomatic turmoil in the Middle East, being a region that can affect things for the Euro-zone in more a heated Israeli conflict. Nevertheless, the Europeans have caught a break after reaching an important truce with the U.S. after a trade spat that saw things such as whiskey be given incredibly high taxes that were meant with more retaliation.  Ultimately, things are very dynamic in the Old Continent and it will cope also with the challenges of low productivity because of issues such as the microchip-making shortage.

CAD  

The Canadian Dollar fell from its highest point in six years as the domestic economy as well as numbers out of the U.S. have failed to impress and create a picture of a very hot economy. Bank of Canada governor Tiff Macklem has kept a mostly hawkish tone, especially in comparison to leaders of other central banks, but had to point out last week that indeed officials need to see more progress. As oil prices continue to find guidance based on demand for the Summer and bottlenecks are resolved throughout the economy, “Loonie is vey volatile and could lose plenty of ground gained this year or merit its strength.

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