The U.S. Dollar is trading around its best levels since July 2020, per the Bloomberg Dollar Spot Index, reaching the peak following a combination of mostly solid economic data and the chaotic situation developing in Ukraine.
Overview
The buck is currently dominant as the safe-haven role only increases while the economy continues to show signs of growth. Change in Non-Farm Payrolls for February revealed an added 654K jobs to the economy vs. 413K.
Additionally, the Unemployment Rate went down from 3.9% to 3.8%. One thing to note is the deceleration on wage growth as Average Hourly Earnings per month did not expand at all when it was expected to see a half percent increment.Following Fed Chairman Jerome Powell’s testimony to Congress this week, it is basically guaranteed that the Fed will make a move and hike interest rates by 25 basis points on March 16th. On the Oceanic side, the Australian Dollar and “Kiwi” both improved as the great exceptions to the buck’s momentum based on the records being reached for some metals and raw materials. We shall continue to monitor the overall global effects coming from escalation between Russia and Ukraine.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The Euro fell to its weakest point since May of 2020 and has been highly volatile after the developments in the Russian invasion of Ukraine. A nuclear facility was hit, and civilian deaths continue to rise as the war effort intensifies from the aggressor. N.A.T.O. leadership is on high alert as they feel that these indiscriminate attacks represent a human crisis as well as a radioactive threat to the environment of the larger region covering Eurasia.
Expect swings to continue from headlines that put the buck into an even better position, but any work towards resolution will result in a massive swing upward for the shared currency.
GBP
Although the Sterling has taken some losses, the Pound has been relatively more resilient than Euro when it comes to the effects of the conflict. GBP/EUR is now at the highest level in Pound’s favor since July 2016. Nevertheless, it is possible that all the commotion from war and pandemic recovery could force the Bank of England to slow down its plans on hiking interest rates.
We will see just how buoyant GBP can be, but one important thing to note is a positive turn on relations between the U.K. and the EU as they both see Russian aggression as detrimental to all European as well as British interests. Any resolution, soon or in months, will revive both currencies significantly against the buck, especially if it is priced-in already the Fed will take a gradual approach with interest rates going forward.
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