The U.S. Dollar is trading in favorable ranges this morning to start the month on the right foot.
Overview
Last week’s statements from the Fed reassured investors and traders that the economy still has ways to go before the Fed starts even considering tightening financial conditions via higher interest rates or even any tapering of the bond purchases that restarted after COVID hit. While economic data continues to show improvement, the global economy narrative is getting a boost, but today will be a quiet one for global markets as China, Japan, and the U.K. observe holidays. Commodities continue to go in price, which in turn is starting to translate into concerns over inflationary growth coming. Nevertheless, Treasury Secretary Janet Yellen made statements confirming to markets that inflation is not a concern and that it is expected to climb as recovery is the focus towards full employment.
We could see some talk today about the size and potential impact of President Joe Biden’s tax and spending plans, which are set to involve the government more in the rebuilding of the country. Prices have not yet started to impact consumers in a major way, but suppliers are starting to wonder with global commercial trade still facing challenges. Meanwhile, European stocks are gaining steam as the COVID and vaccine situation has started to show major improvement although mandated lockdowns may affect the pace of economic betterment.
What to Watch Today…
- Construction Spending 10 AM
- ISM Manufacturing 10 AM
EUR ⇓
The Euro rose in the past few weeks but is finally hitting the brakes as U.S. growth has once again benefitted the dollar. A better vaccination campaign and utilization of Astra-Zeneca globally gave Euro appreciation to close April and we shall see if there is room for higher value in May as countries start reconsidering opening up. Germany is reporting a better situation in terms of the need for hospitalizations, France has stopped a travel ban it had in place and the Netherlands is allowing citizens to dine outdoors as well as shop non-essentials. The reality is less ideal than the re-opening we are witnessing in the U.S., so as it improves, Euro could maintain the gains from last month.
CAD ⇓
The Canadian Dollar strengthened by 2.5% in April as Canada continued to vaccinate its people, kept a large stock of vaccines and stayed away from indicating any further loosening of financial conditions for the country. The Bank of Canada has showed a lot of confidence in the economy and overall, the commodity market surging has also benefitted the neighbors up north. Although there is no traveling at the moment, it is possible these restrictions will loosen up, only signaling that the “Loonie” will be able to keep its surge.
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