Weekly Market Update 12 Feb 2021 – USD turning around? EUR resilience and commodity currencies outperformance
Weekly Market Update 12 Feb 2021 – USD turning around? EUR resilience and commodity currencies outperformance
1. With US stocks consolidating and growth moderating, investors are expecting the bubble to deflate. As a large part of USD’s fall in 2020 was related to the strength of equities, an expected correction could correspondingly cause USD to rally. Moreover, subdued payroll growth along with more states reporting cases of the highly contagious variant of the coronavirus could spark new fear of equities falling lower and driving USD higher
2. European Central Bank Governor Christine Lagarde does not see rising inflation as a concern, suggesting that policy is likely to be accommodative moving forward. Despite the slow vaccine rollout and strict lockdowns, EUR continues to display resilience, however, it may meet resistance if Eurozone industrial productions shows weakness
3. With lower virus cases and minimal restrictions in the commodities focused countries, the commodity currencies continue to outperform; AUD gained with stronger consumer inflation expectations and NZD strengthened despite weaker credit sales. CAD faced headwinds due to a halt in rising oil prices and was unable to participate in the rally
