U.S. Dollar Flat as Rescue Package is Expected
MARCH 10, 2021
The U.S. Dollar is trading in mostly tight ranges as traders and investors wait for confirmation that Democrats can go ahead and pass the rescue fiscal package that has to take many rounds of negotiations.
The $1.9 trillion-sized bill could give relief to those whose unemployment relief is about to run out. There is not a lot of action across markets as yesterday’s moves were countered by sessions overnight and while futures were looking in the green, it is clear that the correction experienced comes from doubts about the pace of recovery. Around the globe, some central banks such as in Australia and Norway are discussing how markets should price in interest rate hikes. Nevertheless, the real economic growth needed is not quite there so there is this feeling that we need to see more to get clear guidance.
Inflation has been talked about plenty, and even in terms of fearing its rise, yet figures earlier revealed that there is no outrageous pressure mounting on the general price level. Consumer Price Index growth in February fell below expectations, with the monthly advance just at 0.1% instead of 0.2% and the yearly average coming in at 1.3% under the 1.4% estimated.
It will not be until we have more complementary fiscal help that the overall picture for the economy will seem as truly positive. Once the bill is announced, it is possible the buck strengthens if it is perceived as a strong move for America or the greenback could start dipping if it is taken as a plus for the global recovery narrative in reflation.
What to Watch Today…
- No major events scheduled for today
The Euro is not doing anything special at the moment, but it is a general sentiment that the Euro-zone is kinda stuck until infections subside and the vaccination rollout is completed. There is talk about ongoing delays, but also officials saying the EU shall reach its goal of inoculating 70.0% of the population by end of this month.
Q1 was set to be problematic as we figured how to vaccinate people, overcame a tough winter, and get people back to work. It is this last item that is most problematic here and across the Atlantic. Expect Euro to continue trading within familiar levels as long as there is no major announcements or improvements.
Although no longer a full member, the U.K.’s ability to produce vaccines is still affecting its biggest trading partner. In the past week, we have been reading of small disagreements brewing between the U.K. and the EU when it comes to sticking to Brexit regulatory framework and details. Cooperation is important as well as abiding by the new rules, but there have been a few skirmishes.
The latest was apparently from the President of the European Council Charles Michel, who accused the U.K. of blocking exports of vaccines to the continent. U.K. Foreign Secretary Dominic Raab defended the process and said the claim is “completely false.” With frustrations mounting over the pace of economic growth, we shall see how much tensions there could build between the two as the struggles remain in fully re-opening the economy.