23/03 – Another stimulus plan in the US

GBP: Looking wobbly

EUR: Still watching vaccine news

USD: How does dollar trade around stimulus?

Sterling

Jobs and wage data this morning from the UK continues to show that the UK economy is being kept in a form of stasis until the furlough scheme ends and although pay figures look to have improved, this is more of a statistical quirk given lower paid workers in hospitality or service sector employment aren’t earning those wages at the moment; increasing the average.

News from Parliament yesterday that foreign travel will be banned until the end of June pending reviews on April 12th and every 35 days after will not have helped sentiment in the travel, hospitality and service sectors, possibly prompting a little of the sterling weakness we’ve seen since.

Euro

The single currency seems to have brushed off the news from Turkey and the knowledge that Germany will be heading into another 5 day lockdown to prevent a further rise in virus cases. For my money, euro remains tied to risk efforts this week and good news about vaccine supply should support the EUR.

US dollar

Headlines around yet another stimulus package from the Biden government totalling $3 trillion has cast an interesting light over the dollar this morning. With bond yields elevated and the previous $1.9 trillion plan passed and now being disbursed, conversations on whether the US cares about its deficit and the value of the USD are likely.

Back in 2012 with little fiscal support and the Fed having to do a lot of the heavy lifting, the dollar crumbled under the weight of monetary policy easing. That may still happen of course but a further stimulus package when people in the EU are still waiting for the disbursement of the first does not signal EURUSD upside to me.

GBPUSD levels could get interesting in the coming sessions, especially with those bond auctions starting today at 5pm.

Elsewhere

NZD has fallen overnight following changes in property taxes that make speculation in the country’s property market less attractive than before. Markets in places like Christchurch and Auckland have seen prices double in a matter of years and while these announcements will help local buyer’s stay in touch with a strong housing market, we do expect foreign investment in the sector to dip slightly, leading to a lower transactional reason for holding the currency.

Market rates

Today’s interbank rates at 09:33 against sterling. Movement vs yesterday.

Euro€1.158 ↓
US dollar$1.378 ↓
Australian dollar$1.796 ↓
South African randR20.53 ↓
Japanese yen¥149.8 ↓

Have a great day everyone.

Thanks for subscribing to our market reports!

You've been added to our Chief Economist's mailing list for his morning reports.

Share:
Jeremy Thomson-Cook

Jeremy Thomson-Cook

Jeremy has over 13 years experience working in the FX industry. As a specialist in political risk mitigation and currency hedging, he regularly advises clients on the day-to-day moves of the markets and the implications of fiscal and monetary policy on international businesses.