The U.S. dollar is trading in much improved ranges ahead of tomorrow’s big Fed policy decision announcement and press conference.
Overview
U.S. equities yesterday experienced big swings yesterday as traders try to figure out their strategies in the middle of economic recovery that is to be left on its own while the Fed tightens. European stocks rebounded from what had been their biggest decline since June. Volatility is the name of the game right now, with the Cboe Volatility Index (VIX) rising for a sixth straight day. It is around its highest point since October 2020. Thus far, this has been the worst monthly performance for stocks since the pandemic began.U.S. and Russia are said to have thousands of troops on high alert for deployment in Ukraine. The Russian military is apparently at the border ready to strike at any given moment. The tension has caused worry across the entire world, in particular the European Union. On other assets, Bitcoin and crypto are down big time, with some calling for a “crypto winter,” a time for a lot of these enigmatic and fragmented assets to lose major value. Tomorrow will be a big day so watch out for any possibility for dollar movements today as developments keep coming.
What to Watch Today…
- No major economic events are scheduled for today
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EUR
The Euro has fallen to its weakest point since December 21st as a result of the risk-off sentiment and the potential for struggle if Russia does take any action in Ukraine. Euro-zone PMIs yesterday revealed that Omicron in Q4 impacted purchases and saw increased price pressures. Certainly, Europeans are afraid that Russia could also just become a problematic supplier of natural gas and oil. We shall monitor how much the shred currency is affected tomorrow when the Fed has its moment under the spotlight.
GBP
The pound is moving around its weakest levels since the end of December as the combination of disappointing data and political pressure on Prime Minister Boris Johnson have clouded enthusiasm over interest rate hikes. PMIs in the U.K. showed similar pressures as the Euro-zone and the PM continues to avoid calls for resignation. If indeed labor and expenditures for businesses are suffering, we shall see how it plays into the Bank of England feeling confident enough to increase interest rates as promised.
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