U.S. Dollar Keeps Rolling as Markets Stall

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U.S. Dollar Keeps Rolling as Markets Stall

MARCH 15, 2021

The U.S. Dollar is trading in more favorable ranges across the board, continuing its momentum from the end of last week after the passing of the major stimulus package, which also came with tens of billions in taxes to the top-earning big companies. 

Overview

As investors see it, they are concerned the new bill and future potential tax hikes on the highest incomes could start denting the risk-on sentiment stock indices are enjoying. Even European automakers and travel companies surprised and helped lift the value of the Stoxx 600, but the high values in tech may start dwindling.

Today could be a day of limited action without much in terms of either major data or developments as markets will surely await commentary from central bank authorities, the Fed meets on Wednesday and the Bank of England on Thursday. At the moment, it looks like the buck has room to appreciate since there is an overall sense that the global equity rise could hit the brakes as even liquidity issues in China are weighing on Chinese exchanges.


What to Watch Today…

  • No major events scheduled for today

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EUR  

The Euro fell slightly as the pressure could grow on all assets as inflation concerns remain and the world’s resurgence in investment could start slowing down. Additionally, there continue to be problems with the distribution of vaccination as distributions hit a snag and now some nations are asking for Russia’s Sputnik to be included, which could add to the concerns over control by the EU, whose relations with Russia have been tense after sanctions over the Navalny case.

Furthermore, the consistency in German leadership may be slipping ahead of a major general election in September as Chancellor Angela Merkel’s CDC Party had their biggest loss since WWII in two regional elections held over the weekend. Things are not looking very Euro-positive.

GBP  

The Pound is down ahead of the BOE’s policy meeting Thursday as things in the market are playing useful to dollar advancement as traders look for the impact of U.S. fiscal policy in spending and taxes. In the U.K., tax hikes are being held back, particularly because the financial sector and even commercial traders are suffering from a slowdown caused by the pandemic and Brexit border woes. We shall see how much monetary policy can help on Thursday, but Sterling could start dwindling for real economic concerns.

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