U.S. Dollar Tight As Markets Also Quiet
JUNE 08, 2021
The U.S. Dollar is trading in mostly tight ranges as global markets seem uninspired at the moment.
Going into the final month of the second quarter of the year, we are waiting to see if the U.S. can indeed pass a massive spending bill and if other regions of the world start showing improvement in the COVID fight as supply chains remain vulnerable from a lack of full global re-opening. One good piece of news came for Tesla, which is reportedly doing a lot of car deliveries in China. We may see losses for Bitcoin and crypto-based on fears that governments can indeed successfully interfere in transactions and recover what they may want after news that the crypto paid in the Colonial Pipeline hack was recovered.
Markets are also awaiting the European Central Bank’s take on the economic recovery after statements from financial officials that there is actually room for further aid. ECB President Christine Lagarde’s statements will be carefully monitored on Thursday. After reaching a price of $70.0/barrel for the first time in two years, WTI Crude is starting to slip as some traders fear that the rally in price may have gone too far. We shall see how this in turn may affect the buck against petro-currencies. JOLTS Job Openings for the month of April are out at 10 AM.
What to Watch Today…
- JOLTS Job Openings 10 AM
The Euro is on a bit of retreat mode as economists will weigh the ECB announcement on Thursday and upcoming data looking back at the start of the second quarter. While re-openings are happening and there is hope for tourism to help the pace of growth, there are worries that the rest of the globe will require borrowing costs, in general, to remain quite low.
Lagarde will likely address the need to digitalize and manage crypto while also answering to statements from the EU governing council that the deposit rate, currently at (-0.5%), could be lowered further. On the fiscal front, there is good news that could also complement the ECB’s decision as the last two countries left for ratification of the recovery funds distribution have approved. Expect no clear guidance, because we believe ECB could pull back on further appreciation of the shared currency regardless of the positive development.
Pound Sterling is falling in value from a couple of negative news items regarding Brexit violations over the Northern Ireland agreement and the timing for allowing travelers in without any quarantine requirements. As of this time, these are developing stories, but the EU is considering a trade war as a possibility if the U.K. overrides the stipulations and conditions set for N.I. trade. Additionally, the U.K. is also having issues with easing COVID measures. Sterling could fall hard, but we have seen it climb regardless of a general sense that things in the U.K. are not too great, actually problematic.