The U.S. Dollar is moving in familiar ranges from last week as the start of the year is characterized by a risk-off mood because of stimulus tightening in the U.S.
Overview
Last week’s labor data seemed to indicate that the economy is operating near full employment and equity markets seem to be nervous about what it could mean in terms of Fed policy, which is foreseen to get tighter throughout the year. While markets digest the idea of less “easy money,” China and other large nations are struggling to cope with keeping activity going in the midst of a variant that has caused a lot of people to call off work sick. We begin the week with no serious data to break down until Wednesday’s inflationary numbers in the form of Consumer Price Index figures. The week will also be highlighted by commentary from various Fed officials throughout as Tuesday the Senate Banking Committee has its confirmation hearing for Jerome Powell to continue as head of the Federal Reserve.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The Euro regained its value and is looking bound to appreciate after some commentary suggesting the future will see the need to control higher prices. European Central Bank member Isabel Schnabel gave a speech over the weekend in which she explained how EU plans for energy transition will create more inflation naturally.
In the past, we had mentioned in this space and other outlooks how Euro-zone growth could eventually be highly impacted by Green Plans that have not been prioritized in news headlines. If the commitment is real and the EU as a whole reduces its carbon footprint dramatically, that transition could spark changes to the ECB’s stance. The more growth forecast in the Euro-zone, the better the prospects for strengthening of the shared currency.
GBP
Sterling has not moved dramatically, but we will pay close attention to end-of-week figures focusing on the U.K.’s Gross Domestic Product. The start of the year has witnessed more criticism over the British government’s handling of the pandemic. Political observers note that the Prime Minister’s popularity is declining as well as for his party of Tories, who are afraid that they could pay a heavy toll in the May election and perhaps even face the need to have a confidence vote on Boris Johnson.
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