- Virus Struggles Continue to Plague Euro
- Biden Infrastructure Speech Awaited
- Stocks Hit Following Huge Fund Liquidation
The Euro forex market has continues to struggle this week with new lows being hit. This has been driven by increasing US treasury yields favoring a strong US Dollar, and also by the fact that European struggles with COVID-19 persist. In the US, traders are keenly awaiting a speech by President Biden on a possible infrastructure bill. This could give Wall Street a boost following an indifferent start to the week.
4-Month Low For Euro as Dollar Strength Continues
The slide in both the Euro and Pound forex markets against the Dollar has continued into this week. The Euro has been the worst impacted having slid back toward 1.17 while Sterling also grapples with lower levels than it has seen recently. There are many factors at play in these movements, not least the continued EU battle to get COVID infections under control.
Several key areas have recently braced for another wave of the virus with Paris being one major city that has reentered lockdowns. The GBP has been less impacted as they continue along the roadmap to reopen and remove restrictions on schedule. The only major hiccup here has been a running battle with Europe on the export of the AstraZeneca vaccine. This spat has led to proposals for future international treaties to assist nations on how to mount a coordinated response to future pandemics.
Yields Rise as Attention Turns to Infrastructure
Focusing on the key factors that are moving the Greenback to further strength for those in forex trading, besides the struggles of other nations to vaccinate while the US now appears to be well on the road to success in this regard. Up to 90% of Americans are set to be offered the vaccine by the end of April. With one achievement in the win column, President Biden is now expected to unveil his big bucks infrastructure plan.
Information that has already started to come out about what the plan might contain points to a potentially massive amount of total spending, up to $3 trillion. It also appears there will be a strong focus on green energy but no new tax on gasoline at least for now. Forex brokers are primed to see how this will impact both the Dollar and the wider trading environment this week.
Stocks Try to Recover From Huge Margin Call
Wall Street was rocked toward the end of last week by news that Archegos Capital was forced to liquidate many of their positions that had been very highly leveraged with several top brokers around the street. This sent shockwaves through a number of Chinese stocks as well as both Viacom, and Discovery which the family office had very large positions in.
This is being viewed as an isolated incident but it has nonetheless raised the discussion around rule changes and greater awareness between brokers particularly around leveraged positions. Market futures remained mixed with the Dow Jones trading up slightly, and the NASDAQ in negative territory.