After initially sinking on the dovish Fed statement earlier this week, the dollar is roughly where it started the week
The dollar is flat this morning after gaining throughout yesterday. Higher Treasury yields, especially the 10-yr, brought investors into the greenback. The markets largely ignored the first high-level talks between the US and China since Biden took office. This morning's Fed announcement to end the SLR relief for banks kept the sell-Treasuries/buy-the-dollar trade alive. The pound sinks on profit-taking.
March 19, 2021
EUR/USD 1.1882 GBP/USD 1.3839 USD/CAD 1.2532 AUD/USD 0.7725 USD/JPY 109.01 USD/CNH 6.5172 USD/ILS 3.3008 USD/MXN 20.3973 USD/CHF 0.931 USD/INR 72.5188 USD/BRL 5.5311 USD/SGD 1.3437 USD/DKK 6.2580 USD/SEK 8.5691 USD/NOK 8.5901
The Federal Reserve announced an end to a Covid relief mechanism sending US Treasury yields and the US dollar higher. The Supplementary Leverage Ratio (SLR) had been modified temporarily and the Fed said this morning the relief for banks would expire at the end of the month. The gain in the 10-yr Treasury and the dollar proved temporary as the news was somewhat expected.GBP
The pound is weaker this morning after briefly touching 1.40 earlier this week. Yesterday’s Bank of England meeting held no surprises as rates were left unchanged. Similar to the Federal Reserve, the British central bank is showing little concern for the recent rise in government bond yields. The pound has been quite strong over the past couple months and many see today’s selloff as profit-taking.EUR
The euro is weaker this morning after giving back all its gains from earlier in the week. Covid related restrictions are hitting the European economy yet again as Paris goes into lockdown following similar measures in Germany and Italy. FX traders will favor the dollar as long as US Treasury yields are climbing and vaccinations lag in Europe.CAD
The Canadian dollar weakened versus the US dollar despite January Retail Sales data coming in better than expected at -1.1% vs forecast of -3%. The price of oil is steady below $60/bbl for WTI after falling along with equities throughout most of yesterday.ASIA/PACIFIC
The Japanese yen is flat versus the dollar despite the Bank of Japan clarifying their target rate for the 10-year JGB is plus or minus 0.25% around zero where markets had thought the range to be 0.20%.
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