The USD Gains versus Major Currencies as the Stock Market Cools off
On Jan 22, the USD posted gains against major currencies as doubt begin to appear on whether President Joe Biden will follow through on his ambitious campaign promises. Investors are keenly tracking whether his administration will pass the $1.9 trillion stimulus package and fast-track delivering and administering 100 million coronavirus vaccines in the first 100 days in office. There have been hitches, impending the smooth delivery of the vaccine in recent weeks while Republicans are already pushing against the huge stimulus package with Senator Roy Blunt saying Joe's stimulus plan is a "nonstarter."
The see-sawing performance of the greenback and the possible accumulation—versus the majors, come when the country saw a surge in coronavirus cases in December. This, surprisingly, didn't affect the US economic data. In the last few weeks, reports point to accelerating manufacturing and service sectors with tangential data suggesting that American's purchasing power wasn't affected. Real Estate is picking up and may continue to this year, meaning that there could be little reason for investors to worry about the economy. Accordingly, the USD may extend gains of Jan 22 specifically against the CAD and AUD, currencies that performed dismally against the greenback even with superior retail sales in Canada and upbeat procurement managers in Australia.
Impact on the USD:
Bullish. Even with overall market confidence, the USD's performance is choppy. The USDX must breach above 91 for buy trend continuation, a move that would likely mark the end of the Euro, CAD, and AUD rally stretching back to Q1 2020.
More market news over on our Blog