Daily Market Update

U.S. Dollar Trying to Close Week a Winner

September 17, 2021

The U.S. Dollar is holding on to most of its gains across the board as yesterday equity markets experienced a pullback as this week has been characterized by growing concern the economic recovery is in trouble. 

Overview

The Delta variant truly changed the course of progress globally as countries need to reconsider tightening border crosses and extending lockdowns in certain countries, which feel they have gone back to 2020 COVID mode. More importantly, in the middle of the world trying to find clear guidance, the Chinese government has decided to use its reach and power to rearrange the business operations of big companies. Also, the country is facing mounting debt as borrowing has increased.

The Federal Reserve meets next week when we will likely get an explanation as to why they have to delay tapering until November. Later this morning we will get September’s University of Michigan Consumer Sentiment, which still happens to be around a decade low. It could be a day for the buck to establish strength, but the volatility as options and future contracts expire could move buck the other way as well.

 

What to Watch Today…

  • No major economic events scheduled for today

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EUR  

The Euro has been up-and-down lately as European economists make up their mind about inflation and the likelihood of tapering in the Euro-zone.  European stock exchanges have been declining with global equities overall down for two weeks straight. On the outlook front, ECB governing council members have stated that they believe inflationary growth could be higher than anticipated if no further shocks from COVID materialize. Chief Economist Philip Lane, a typical dove, was reported to have told analysts he sees the ECB target reached in 2025. We shall see what the shared currency does as it seems stuck in current ranges.

 

GBP 

The Pound is not moving much, but it could tilt towards weakening as data has once again placed doubt on the economic situation of the U.K. While re-openings were a welcome piece of news in the summer because it was assumed activity would go up, Retail Sales surprisingly fell again in August making it a fourth month of contraction at (-0.9%). This bad streak is the worst slump in Retail Sales in about 25 years. Not great news, but certainly puts the Bank of England in a tough situation. 

 

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