The U.S. Dollar is on rally mode this morning following the end of last week’s sour mood over the strength of the economic recovery.
Delta dealt a serious blow to the progress that had been experienced the first half of the year, thus the record valuations now in equities seem stretched out, and plenty wonder how much more room or merit stocks may have. Additionally, the U.S. is playing a safe-haven capitalist role as once more news from China aim at breaking down big tech companies such as Ant Group Co.’s Alipay. The deluge of regulatory and supervisory interventions is signaling that the Chinese government has allowed companies to grow to a dissatisfying level and will take the reins back.
Meanwhile, metals and oil are climbing in price with the latter hitting a six-week high. The microchip shortage and other physical obstacles to industrial productivity are still causing supply-chain havoc, but inflation is expected to have taken a step back, something that could be evidenced by tomorrow’s Consumer Price Index figures.
What to Watch Today…
- No major economic events scheduled for today
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The Euro is trading at its weakest levels since the end of August as the continent gets ready for a major change in leadership as German elections are around the corner. Over the weekend, a debate between the three candidates seemed to favor the Social Democrats in the post-event poll with a 41.0% approval as most convincing. German Chancellor’s Angela Merkel’s Christian Democrats came in at just 27.0% while the Green candidate was a close third.
We shall see what the possible change will mean for an EU agenda led by Germany for decades. Additionally, there may be voices, such as familiar EU economist Philip Lane, that will lower the enthusiasm for Euro with expected commentary on the ECB this week to be dovish. There are also concerns in Italy that Prime Minister Mario Draghi’s economic rebound has not been good enough for the country.
The Pound is down slightly but could turn around its fortunes if traveling across Europe lifts off. The U.K. is abandoning its vaccine passport and that could spark renewed interest in visiting. Delta has slowed things down, but the government is counting on a better fall. Things in Britain are going to be driven by recovery across indicators and improvement to new trading life with EU borders.
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