The U.S. Dollar is aiming to close the week with another half-percent barely gained as volatility this week has caused swings between losses and gains because of markets trying to find guidance in the midst of trouble for the global economic recovery.
Unfortunately, there is disillusion with the slowdown in vaccination rates and the sluggish distribution in even the more advanced countries that were once doing fine such as Australia. Meanwhile, infections are up, valuations for plenty of things seem way too high, and after spending with enthusiasm following the worst of COVID consumers are now worried about the environment for big-ticket purchases such as vehicles as well as homes.
Nevertheless, volatility remains as now the reflation trade seems to be cooled off. While some countries seem to be making progress, others seem to be regressing, thus no clarity about how and when as a globe we will overcome this pandemic. The Olympics held with no global fans whatsoever are a clear example that we have plenty of ways to go. At the same time, earnings are impressing so some traders wonder if the doubts surrounding the economy will fade away soon. Expect these weeks until September, a pivotal time for re-openings and activity when we can gauge if real progress had been made.
What to Watch Today…
- No major economic events are scheduled for today
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The Euro moved, but not much this week following the central bank policy announcement and a back-and-forth between uncertainty and optimism in equity markets. While real economic growth worries all, European stocks are also on the rise as EU-listed companies also demonstrate better earnings than expected.
The reality for the Euro-zone is that the emergency measures in place will need to stay for the year and more than likely much longer since officials have clear targets and also hope to work towards full employment like the Fed. It will be slow as the Summer holidays continue for plenty, but we will monitor headlines and any potential change of hearts among the ECB.
Sterling has climbed by 1.4% this week following re-openings across the U.K. and a break from awful trading headlines recently. We had foreseen trouble for Sterling, which recently has demonstrated weakness, but again, it is a volatile currency as the delta variant affects perception.
The Bank of England is likely not going to change anything they are doing either so expect swings as the U.K. indicators are measured against issues brewing from EU items that are still to be resolved.
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