Weekly Market Update 23 Apr – Slowdown in growth of USD despite strong economic data while UK and Europe gain momentum in recovery
Weekly Market Update 23 Apr – Slowdown in growth of USD despite strong economic data while UK and Europe gain momentum in recovery
1. While the US dollar performed well in the first quarter of 2021, it is facing some challenges in the second quarter, recording its third weekly loss amid signs of diminished enthusiasm on the US reflation trade and a soft note in Treasury yields. Positive economic data reinforced the view that 2021 could see the best economic growth in nearly four decades. However, there are still headwinds that may derail the dollar’s growth: taxes, sudden problems with vaccination and recoveries out of US.
2. Despite rising virus cases and widespread lockdowns, the Eurozone recovery appears to be gaining momentum. ECB left monetary policy unchanged, and President Lagarde expects economic activity to rebound firmly in the course of 2021 on the back of progress with the vaccination campaigns and the envisaged gradual relaxation of containment measures.
3. Britain’s retail sales rose in March by the most since June’s record increase, while PMI data suggested the country’s private sector output grew by the most since November 2013, reflecting the effect of the easing of coronavirus restrictions on consumer spending. Despite the positive reports, GBP has not been able to rally.
