The U.S. dollar was able to build on its momentum from yesterday overnight.
Overview
The Bloomberg Dollar Spot Index is headed for its best two-day run in three weeks. There is little in the way of fundamental reasons that the dollar has enjoyed gains as global markets are quiet. The most likely reason is that traders are taking profits near multi-year lows for the greenback against various pairs.
Later today, the Fed will release their Beige Book. There are also a number of Fed speakers including Charles Evans, Raphael Bostic, and Robert Kaplan. There is no first-tier data slated for release in the United States today. Friday’s non-farm payroll data remains the key risk event on this week’s docket.
What to Watch Today…
- Fed Beige Book at 2 p.m.
EUR ⇓
The Euro is selling-off from its recent highs against the dollar, making the case that the Euro’s advance since the end of March might be overdone. The impetus for the overnight move appears to be widespread U.S. dollar strength, rather than Euro weakness. However, there was data released this morning that will cause European policymakers cause for concern. Euro-area data showed that producer prices rose a whopping 7.6% in April from a year earlier. That marks the steepest gain in producer inflation since 2008. This will put the European Central Bank in a tough spot as they try to keep inflation in check and continue their stimulus plan.
GBP ⇓
The British pound continued its march lower against the U.S. dollar and touched a one-week low. The sterling is under pressure amidst fears that rising cases of Covid-19 will delay economic reopening. The sterling has rallied this year as Britain outperformed many of its counterparts on the vaccination front. But now the government is weighing whether to ease all rules on June 21 or maintain vigilance and delay full reopening.
Despite the sterling’s stumble this week, the pound is up 3.5% year-to-date versus the greenback.
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