Despite a deepening sell-off in global equities and rising bond yields, the U.S. Dollar was mostly flat overnight.
Overview
The greenback did see some volatility overnight but opened today’s session about where we closed yesterday. U.S. equity futures are lower again today, with tech stocks feeling the biggest hit.
Continued and increasing worries about inflation has kept the risk mood “off.” Treasury yields moderated but remain elevated and the gap between the 5-year and 30-year are at a six-year high. Market participants are eagerly awaiting testimony from Federal Reserve chief Jay Powell this morning. Powell will speak before the Senate Banking Committee starting at 10 a.m. We expect Powell to maintain that Congress should act and pass more fiscal stimulus while continuing to promise to keep interest rates low through 2023. Despite this, bets are starting to increase that the central bank may have to bump interest rates later this year. This is not our base case, but if it comes to fruition it would likely benefit the greenback.
There is some second-tier economic data slated for release today including the Richmond Fed Manufacturing report but expect Powell to dominate headline
What to Watch Today…
- Fed Chair Powell testifies before Senate Committee at 10 a.m.
CAD ⇑
The Canadian dollar pushed stronger overnight but has since given back most of its gains. Nevertheless, the loonie is near its 2018 high reached during Monday’s session. The Canadian dollar has enjoyed a rally in commodity prices, which have continued to push higher amidst the global reflation trade and even as Texas energy producers come back online.
There is no major economic activity due out of Canada today. We will be monitoring a speech by Bank of Canada Governor Tiff Macklem which will focus on the impact of Covid on the labor market followed by a Q&A session,
GBP ⇑
The British pound made the most noise on a quiet evening. The sterling rose 0.3% and reached fresh highs last seen in April of 2018. The sterling had been buoyed by progress on the vaccine front and got another bout of good news after the U.K. government announced a road map to ease lockdown rules over the next four months. The plan includes reopening schools early next month and outdoor hospitality by mid-April.
Ready to spin the currency market moves in your favor?
Discover HOW WE Can HELP You SEND or RECEIVE PAYMENTS
