Euro and Pound Race Higher as Dollar Tumbles


The dollar index which measures the greenback against a basket of major currencies, extended losses, falling to a seven-week low of 90.88. The drop took place despite a rally in Treasury yields. Lately, the performance of the dollar and US Treasury yields were strongly positively correlated, but this was not the case early this week. The European currencies did benefit the most from the dollar slump, with investors focusing on a brighter outlook for the region, considering the Eurozone is heading to its possibly last lockdown, and the United Kingdom reopening the economy in a faster manner. The EURUSD rallied to $1.2073, the highest since early March, the GBPUSD soared to $1.4010, and the USDJPY dipped to 107.97.


Major US stock index futures eased a little during the first trading session of the week, as Treasury yields picked up. The 10-year Treasury yields rebounded to 1.63% after diving to a one-month low of 1.529% last week on better demand for US debt. With the market seeming overvalued for most investors, some profit-taking action was seen as US corporations continued to reveal their outstanding 1st quarter results. However, with the current monetary policy in play, market participants could be looking to jump into the market on any noticeable technical corrections. The Tech-heavy Nasdaq suffered the most from yields rebound, hitting a low of 13824, the S&P500 futures dropped to 4141, and Dow Jones Industrial Average futures hovered near 34000.


Precious metals prices eased as US Treasury yields edged higher. The price of a gold ounce declined from a seven-week high of $1789, to $1765 erasing almost 1.4% of gains, the price of a silver ounce hovered near $26, and palladium eased from an all-time high of $2852, to $2786.


Oil prices raced higher amid optimism over the economic recovery despite a significant rise in covid19 cases around the world. Investors are praising the fact that oil producers will continue to do whatever it takes to support and stabilize oil markets, against any headwinds. The West Texas Intermediate crude May contract rose to a one-month high of $64.23, and the Brent blend June contract rallied to $67.94.

Major Economic Events

GMT Country Event Expectation Previous
14:00 EZ German Buba Vice President Buch Speaks  - -
20:30 US  API Weekly Crude Oil Stock - -3.608
22:45 NZ  CPI (QoQ) (Q1) 0.7% 0.5%


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