Currency Outlook

MARCH 2021 – IN BRIEF

What Happened

  • The battle against COVID-19 continues, but with more approved vaccines and better rollouts
  • The buck closed February in positive territory per the Bloomberg Dollar Spot Index, barely changing after big inconsistent rallies
  • Euro fortunes improved as the European Union secured its inoculation plans and Italy welcomed Mario Draghi as new Prime Minister
  • Pound Sterling continued its good run as the health of the country advances
  • U.S. Congress remains tied up in working on a much-awaited rescue package

Tempus’ View

  • The last month of the first quarter will determine if the pandemic’s economic woes are easing
  • Concerns over rising yields and possible inflation could increase FX volatility
  • Euro could have room for depreciation as the European Central Bank discusses the need to maintain a loose financial environment
  • We feel that the Sterling may be a bit overvalued and could fall if the Bank of England increases quantitative easing
  • March will hopefully mean further progress in reducing infection and re-opening business

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