IFX Market Report: Wednesday 31st March 2021

The US Dollar was able to make upside gains against most of its peers on Tuesday as the US 10-year Treasury yield reached 1.77%, its highest point since January 2020. The Dollar’s strength and latest rise in bonds came “as investors weighed optimism over the US’s vaccine rollout and another plan to boost fiscal stimulus”. By making the promise on Monday that by mid-April, 90% of American adults would be eligible for a COVID-19 vaccination, President Biden set the path for the Greenback to make solid advances this week.

In contrast to the Dollar, while European bond yields are also recording record highs, the Euro printed fresh four-and-a-half month lows yesterday, marking its second straight daily decline. The EU’s continued struggle to manage COVID-19 and effectively roll out its vaccination plan is still the main contributor to the Euro’s decline. German politician Steffen Bockhahn made note of his country’s deficient efforts, claiming Germany is now “the laughing stock of the world”. According to the Financial Times “Germans have been grumbling about the slow pace of inoculations for weeks now”. Thus far, only 11% of Germans have received at least 1 dose, compared with 45% in the UK, 60% in Israel and 29% in the US. Senior German MP Alexander Graf Lambsdorff also expressed his dismay follow the country’s roll out, stating that “Germans long believed they lived in a well-governed country, one that was better run than most other states in Europe… both assumptions have turned out to be wrong”. Given that Germany is (arguably) the most sophisticated and efficient of all EU states, the fact that they are failing to keep COVID-19 under control paints a very distressing picture for the rest of Europe and the Euro.

A stronger Dollar meant losses for Cable on Tuesday. GBPUSD opened the day at 1.3765 and closed at 1.3710. This morning however the pair has managed to recover somewhat and now trades above the 1.3750 mark.

Despite making impressive moves on the day, GBPEUR made a loss on Tuesday, opening at 1.1704 and closing at 1.1692. With lockdown restrictions being lifted in the UK, we can expect to see more advances from the pair.

EURUSD also finished Tuesday a touch lower. The pair started the day at 1.1761 and closed at 1.1725.

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