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.

Economic Data:

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)

  • FX Rates
    February 8, 2021

    Rates are not real time. Rates are today's indicative mid-market rates as of time of publishing, which may vary. Please contact SVB for a current quote.


  • USD

    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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Scott Petruska, CFA
WRITTEN BY
Scott Petruska, CFA

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