Global stocks soar, dollar higher amid upbeat Yellen comments
Comments over the weekend by Treasury Secretary Janet Yellen fueled a surge in global markets. Yellen said she supported a bigger US stimulus package and believed that the slowing Covid-19 infection rates would help the US achieve full employment in 2022. Global stock markets soared to record levels, US Treasury yields firmed firm, and gains were seen in commodity prices and the US dollar. US data calendar for today is empty.
Monday: German Industrial Production (Dec), German Trade Balance (Dec)
Tuesday: US Small Business Optimism Index (Jan), US Job Openings and Labor Turnover Survey (JOLTS) (Dec)
Thursday: US Initial Jobless Claims (week ending Feb.6)
Friday: University of Michigan’s Consumer Sentiment Index (Feb)
February 8, 2021
EUR/USD 1.2063 GBP/USD 1.3723 USD/CAD 1.2753 AUD/USD 0.7692 USD/JPY 105.32 USD/CNH 6.4433 USD/ILS 3.2775 USD/MXN 20.1230 USD/CHF 0.8985 USD/INR 72.9650 USD/BRL 5.3608 USD/SGD 1.3336 USD/DKK 6.1646 USD/SEK 8.3794 USD/NOK 8.5071
Spurred by US Treasury Secretary Janet Yellen’s surprisingly bullish comments over the weekend, much of the global reflation trade is back in play. Demand soared for risk assets – equities and commodities, but the broadly stronger US dollar defied the “reflation trade” convention. CFTC data released on Friday showed that large currency speculators reduced their short dollar positions for the first time in seven weeks.GBP
The UK pound dropped by 0.2% in-line with the stronger dollar. Traders await a speech later today by Bank of England Governor Andrew Bailey.EUR
The euro is little changed from Friday’s close, but managed to remain above $1.20 after trading down to $1.1950 late last week. Italian stocks outperformed as ex-ECB president Mario Draghi begins the task of forming a new Italian government.CAD
The loonie edged lower against the US dollar with demand for the US dollar increased as interest rate differentials between Canadian and US fixed income yields widened in favor of the US dollar. Surprisingly, firm commodity prices had no impact on the currency.ASIA/PACIFIC
Most Asian emerging market currencies made gains on expectations that Biden’s $1.9 trillion stimulus package will pass, helping fuel a global recovery. The Chinese yuan gained 0.25%. The safe-haven Japanese yen edged lower, the USD/JPY currency pair continues to trade above 105.
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