Daily Market Update

Buck Awakens as Equities Markets Tumble

March 05, 2021

The U.S. Dollar is trading at its best level since the end of November, surging this week as a result of an improved outlook for the U.S. and yields rising without affecting the way the Fed feels. 

Overview

Fed Chairman Jerome Powell stated in his webinar that there is no need to really believe in the next year we will blow past 2.0% inflation, so there is no major need to intervene with the yield curve. In turn, this has made the buck an attractive asset in the midst of a lack of global assets with positive earning potential. Equities are going down as experts have weighed that only technology is thriving while other sectors are just trying to recover.

This morning’s release of Employment Data showed no signs of improvement in average hourly earnings, but more jobs were added than expected and the Unemployment Rate went down by one basis point to 6.2%. Overall, this plays out as a good sign for the U.S. economy, but not a great indicator for labor since it does not make up for so many Initial as well as Continuing Jobless Claims out there. We shall see if this continues into next week as the spotlight once again will be on a stimulus package that can make sure all sectors of the economy are up and running.


What to Watch Today…

  • No major events scheduled for today

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LeFonti March 5

EUR 

The Euro has dipped to its lowest point since November as the dollar rally continues based on the concern that the recovery and handling of the pandemic in the Euro-zone are becoming patchy. Each nation, once again, seems only concerned with what they can do as infections have started creeping up after a period of decline.

Compared to Asia and now North America, the continent is looking like it has more problems to navigate through and a slower pace at getting things done. The European Central Bank has also made it clear that while they may not intervene with yields and inflationary growth, they are willing to throw more help financially as needed. At the moment, the shared currency is looking like a depreciating asset.

 

CAD 

The Canadian Dollar has gotten away from its strongest levels since April 2018 during quite an eventful week in commodity markets. OPEC+ met yesterday and concluded that their oil production will not increase, a decision that immediately spurred WTI to its highest level since October 2018. As Canada recovers, expect indicators to be the source of confidence in the “loonie.” If things disappoint, naturally the buck could climb back, but we feel the strength is merited after dealing with the pandemic better than most other nations.

 

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