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Thursday, February 9, 2023

Big moves in currencies this week

Big moves in currencies this week

The financial markets will be busy again this week, with major changes in currencies and stocks possible.

U.S. President Joe Biden will unveil his $3-trillion infrastructure plan on Wednesday, which also happens to be the month and quarter’s end.

Non-farm payrolls in the United States are expected to be released on Friday.

But several markets, including those in the United States, will be closed for the Good Friday holiday.

While lower participation means further consolidation is possible.

It is unlikely this week as investors await the best jobs report in at least five months.

It’s been a good month to be long on US dollars in March.

Consumers and companies are more hopeful. Economic growth is improving, thanks to the country’s ambitious vaccination program.

There’s cause to be positive!

90% of adults qualifying for a coronavirus vaccine over the next three weeks at a vaccination site within five miles of their home.

Investors will analyze Friday’s jobs report for signs of a more sustainable labor market rebound in the months ahead.

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Biden’s Speech

Biden’s proposal to finance capital spending with large tax increases is the only real danger – and it’s a huge one.

There has been talk of new taxes ranging from $1 trillion to $3 trillion, and the bigger the plan, the more strain on equities.

Unwinding the 2017 corporate tax cut, which reduced the rate from 35% to 21%.

Is a low-hanging fruit, but top-end personal income tax rates could also rise.

With stocks trading near record highs, it won’t take much for profit-taking to send equities and high-beta currencies tumbling lower.

With that said, a correction in stocks and a good jobs number should be positive for the U.S. dollar.

Still Biden’s speech, month/quarter end, non-farm payrolls and Good Friday are all potential catalysts for big moves in currencies this week.

The euro appears to be the currency with the worst results.

Germany and France are considering tighter restrictions as coronavirus cases rise and vaccinations progress slowly.

Health officials in Germany have warned that the third wave could be the worst yet.

Leading the government to consider national curfews.

Vaccinations in Europe will eventually catch up to those in the United States and the United Kingdom, but this could be a long time coming.

For the time being, the Eurozone will bear the brunt of the increasing number of cases and widespread months-long lockdowns.

It’ll only be a matter of time before Eurozone data deteriorates.

Tomorrow will see the release of Eurozone trust and German CPI data.

Following lower mortgage approvals, the pound fell against the greenback.

The Canadian and Australian dollars both fell marginally in value, while the New Zealand dollar remained stable.

Vaccine uncertainity

The increase in the US dollar played a role in both of these moves.

In Canada, the loonie was also sold after Quebec banned the use of AstraZeneca’s vaccine for people under 55.

For those aged 18 to 29, Prince Edward Island has banned the use of the shot.

AstraZeneca (NASDAQ:AZN) has been the target of a lot of skepticism, and reports like this would only increase vaccine hesitancy in Canada and abroad.

The ship stuck in the Suez Canal has been freed, and oil prices initially fell as a result of the news, but recovered to end the day higher.

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