GBP: Vaccine push going well
EUR: Italian confidence votes throughout the week
USD: Biden inauguration due on Wednesday
Sterling has not done much through the Asian session and will be hopeful that it can keep itself out of the limelight moving forward. Certainly, statistics from the UK government as to the speed of the vaccine effort are encouraging and that should help underpin a little of sterling’s recent gains, mainly against the euro.
For now, it looks like sterling will remain largely at the behest of market sentiment. Given there is a lot of market moving news due this week – the inauguration of Joe Biden mainly – sterling could be in for a volatile few sessions.
It is ECB week and all focus of the single currency will fall on Thursday’s policy announcements and press conference. There is almost no chance of a policy shift this month following the moves in December and so market reaction will come down to communications from the Governing Council over financing conditions moving forward.
The euro is also suffering from political pressures with confidence votes in the Italian government throughout the week following the resignation of a coalition partner on Thursday.
With US markets closed this morning for Martin Luther King Day we must look forward to tomorrow’s testimony by Joe Biden’s incoming Treasury Secretary Janet Yellen. Known for her role as the previous Fed Chair and a strong proponent of alternative monetary policy efforts. Her appointment as Treasury Secretary is a strong signal to the US dollar and with the belief being that Yellen will let the market decide the fate of the US dollar, further USD weakness could be just around the corner.
That being said, there remain hurdles to jump; namely fears around looming double-dip recessions and whether the exuberance over a global recovery has got a little ahead of itself. With US markets closed today we’ll have to see what kind of day Europe has to see whether Friday’s poor run of data and lingering concerns will drive the dollar stronger from a haven point of view.
The Canadian dollar is lower this morning after feeling the effects of rumours around the Biden Administration’s policy on oil pipelines. Keystone XL is a huge pipeline project begun under President Obama that brings oil from the tar sands of Alberta into the US. Rumours are that Joe Biden will announce his cancellation of said project and revoke the permits needed once he gets into office.
Have a great day.