Daily Currency Update

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Dollar gains momentum against euro

USD - United States Dollar

The US dollar gained ground against the euro to start the session this week, and EURUSD reached its lowest value since the week before Thanksgiving.

EURUSD, which traded as high as 1.22 on February 25, has since fallen nearly 3% and traded at 1.185 this morning. The reason is two-fold. First, Europe’s COVID-19 vaccination program has been slow to roll out. This has kept lockdowns and economic drivers in check. Second, the US Senate passed the $1.9 trillion relief package. Coupled with the US’s vaccination program and an emerging recovery, investors have favored the US dollar.

Nevertheless, for now the narrative has shifted squarely towards inflation fears. Economic calendar events that haven’t mattered for more than a decade will now take center stage. CPI and PPI readings on Wednesday and Friday. If the full CPI reading which is forecast to print at 1.7% comes in closer to 2%, the market will see this as justification for their inflationary concerns and the US Dollar could strengthen with the threat that the Federal Reserve may be forced to increase interest rates sooner than it anticipated.

Key Movers

This week starts relatively muted in the UK, with all eyes on Friday's UK GDP month on month figure. Though GDP is always an important piece of data, this reading maybe taken with a pinch of salt by some, as it is backward looking, and there is no surprise about the difficulties the UK economy has had to undergo in recent months from the pandemic.

The AUD continued to trend down during Friday reaching a daily high of 0.7806 before opening at 0.7641 against the USD this morning. Much of the rise was owing to a positive employment report with non-farm payrolls showing that the country added 379,000 new jobs in February almost doubling market expectations of 197,000. Their unemployment rate also dropped to 6.2% from 6.3%.

Expected Ranges

EUR/USD: 1.284 - 1.193 ▲

GBP/USD: 1.380 - 1.386 ▲

AUD/USD: 0.764 - 0.771 ▲

USD/CAD: 1.262 - 1.269 ▲