Markets await Fed Chair Powell testimony while dollar takes back yesterday’s losses
The British pound is flat in volatile trading after having strengthened for 3 consecutive days. The UK outlined a plan to remove all Covid-related lockdowns by mid-June. The price of oil rises to highs of January 2020, helping the Canadian dollar approach a 3-year high. Weakness in tech stocks is leading to US dollar safe-haven buying, while some market participants wait on the sideline until Powell speaks later today.
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February 23, 2021
EUR/USD 1.2148 GBP/USD 1.4075 USD/CAD 1.2607 AUD/USD 0.7898 USD/JPY 105.38 USD/CNH 6.4715 USD/ILS 3.2631 USD/MXN 20.6850 USD/CHF 0.9003 USD/INR 72.4650 USD/BRL 5.4695 USD/SGD 1.3210 USD/DKK 6.1208 USD/SEK 8.2900 USD/NOK 8.4820
US Fed Chair Jerome Powell begins two days of testimony in front of Congress, beginning at 10am EST today. Markets will be listening for any comments related to potential inflation from fiscal stimulus spending and his reaction to recent increases in the UST yields. The US dollar is expected to sell-off on any comments from Powell indicating interest rates will remain ultra-low for extended periods.GBP
The pound gave back earlier gains this morning after Prime Minister Boris Johnston outlined plans to remove lockdown restrictions in a phased approach. The pound is up 3% vs. the US dollar in 2021 and is within site of the April 2018 high at $1.4325.EUR
The euro is slightly weaker this morning mostly on negative Covid news. Germany and France are both experiencing higher levels of virus cases compared to the UK and other EU countries. The result may be longer lockdown periods, thus holding back economic activity.CAD
The Canadian dollar traded at its strongest levels since April 2018 as the price of oil continues to gain. The positive outlook for oil demand comes from vaccine roll-out expectations and oil supply constraints in the US after much of the nation’s production was shut when Texas froze last week. OPEC meets again next month with Russia expected to push for an increase in supply.ASIA/PACIFIC
The Chinese renminbi is slightly weaker but remains in a tight trading range since the beginning of the year. Some FX market watchers believe the Chinese authorities are holding the USD/CNY rate steady as they wait to see how the relationship with the Biden administration develops.
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