Daily Market Update

U.S. Dollar Dominance Remains, For Now

November 22, 2021

The U.S. Dollar's unstoppable rise continues as a combination of factors is aiding its tremendous strength.

Overview

China has signaled the will to use easing measures, the other central banks are hesitant on tightening their loose wallets, and COVID’s resurgence in Germany has been described by the former Chancellor herself as something “worse than anything we’ve seen.” Meanwhile, the U.S. is going to implement a spending package into law and action while the Federal Reserve has members pushing for tightening over inflationary concerns.Today, we will know if Jerome Powell is headed towards another term or if the decision will be to nominate Lael Brainard. We believe it is possible for the buck to significantly weaken if indeed there is a change as Brainard is perceived as a more dovish Fed chairperson. It is an eventful Thanksgiving week we begin, which historically has been very good for equities. We will watch for data results from Euro-zone Purchasing Managers Index figures tomorrow, the Reserve Bank of Australia’s meeting Wednesday as well as a deluge of indicators such as Gross Domestic Product for the U.S.

 

What to Watch Today…

  • No major economic events scheduled for today

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EUR

The Euro remains beaten down as the difference in policy approaches between the European Central Bank and the Federal Reserve keep on aiding to establish the buck as a safe-haven. More importantly, the COVID resurgence has already forced lockdown and safety measures that put in peril the recovery that the continent was building on. Furthermore, Brexit-related trade issues have, once again, put the relationship and agreement in a bad place.

We do see a chance for Euro reversing losses a bit if PMI’s do indeed exceed expectations.

 

GBP

The Pound gained last week, but it is back on a downward trend following comments over the weekend from Bank of England governor Andrew Bailey. The BOE governor has warned in the past few weeks that bettors on the likelihood of interest rate hikes should cool off their thinking that tightening will go that far anytime soon.

Over the weekend, as he made comments to the Sunday Times newspaper, he clarified that inflation dynamics at the moment are being driven by issues surrounding the supply-chain situation, physical impediments that central bank policy cannot impact.

 

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