Tuesday, March 2, 2021

Dollar Gaining On Strength Against The Weakening Euro

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The EUR/USD exchange rate dropped by 0.09 percent on Friday, January 15, and was at 1.2151, with the DXY dollar index contributing 0.60 percent to 90.78. The single European currency displayed almost zero improvements in the pair with the dollar a day ago, whilst the DXY measure fell by 0.13%.

On Friday, currency markets saw a decrease in risk aversion amid increasing worries about the increase in the incidence of coronavirus infection in many major countries, raising the risk of slowing down the global economic recovery in the first half of 2021. News of cases of death and adverse side effects following vaccination of elderly people in Norway and Germany should also be remembered, which does not contribute to the positive effects. So, 23 people died in Norway, and 10 people in Germany. In this respect, the vaccination rate may decrease due to people’s fears for their health, which in turn will hinder the world economy’s recovery from the crisis.

The main event on Thursday was US President-elect Joe Biden’s address, in which he outlined an economic stimulus package of $1.9 trillion. This effort entails investing $1 trillion on population support, $500 billion on industry support, and the remaining $400 billion on coronavirus prevention and vaccine services. The reaction of currency markets was to reinforce conditionally risky currencies, but by the end of the day, price rises had almost come to naught.

It is also worth remembering Thursday’s speech by Jerome Powell, president of the Federal Reserve, in which he repeated that the regulator is not preparing to consider raising the main rate to minimize inflation threats in the immediate future. At the same time, Powell said that the Federal Reserve would apply the appropriate steps to curb inflation if it hits unfavorable amounts.

In terms of macroeconomic figures, the number of initial applicants for unemployment insurance was reported every week, indicating a rise to 965,000 compared to 784,000 a week ago, while economists projected the figure to be 795,000.

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