Risk-off sentiment driven by lockdowns in Europe lift dollar and hurt oil

Risk-off sentiment driven by lockdowns in Europe lift dollar and hurt oil

Investors are headed to the sidelines this morning due to increased Covid cases primarily in Europe. Testimony by Powell and Yellen will be watched closely for any changes in the Fed's stance on monetary policy tolerance for higher Treasury yields. The price of oil sank 4% on demand concerns taking the Canadian dollar and other commodity currencies lower. The New Zealand dollar fell after the government took steps to cool the housing market.

“What seems to us as bitter trials are often blessings in disguise.”

Oscar Wilde
  • FX Rates
    March 23, 2021

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  • USD

    The dollar is stronger today as risk sentiment took a hit after Germany extended their lockdown due to an increase in Covid cases. Treasury Secretary Janet Yellen and Fed Chairman Jerome Powell will be on Capitol Hill the next two days providing testimony to Congress. They are expected to face many questions about the massive spending plans of the Biden administration. Investors will be listening for concerns in regards to higher US Treasury bond yields.


    The British pound sold off versus the US dollar. Despite the strong vaccination campaign, concerns around increasing Covid cases and the extension of lockdowns in Europe led to speculation the UK would get hit with another wave.


    The euro is weaker after Germany extended the current lockdown another three weeks and tightened rules around the Easter holiday. Covid cases are also increasing significantly in France and Poland. 


    The Canadian dollar is weaker after oil fell 4% in morning training. Traders are concerned additional lockdowns will be necessary to stop the spread of new Covid variants. 


    The Japanese yen gained versus the dollar mostly on technical trading and safe haven buying. Regional stock markets also sold off.

    The Chinese renminbi was flat overnight after the US, Canada, UK and Europe put sanctions on Chinese officials over mass detentions of Muslim Uighurs. China responded with sanctions of its own.  

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Peter Compton
Peter Compton

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