- Quiet Data Day Leaves News to Influence Market
- Pound Strength as Negative Rates Rebuffed
- USD Rebound Continues to Stall
A day of little action in terms of economic figures both in Europe and the US means the forex market will likely be at the mercy of the news cycle for the day. Any unexpected developments on more US stimulus or COVID-19 updates could move the market. The GBP meanwhile has continued its post-Brexit boom as talk of negative rates was roundly rejected. In the US the Dollar Index bounce back above the key 90 marker has remained but stalled close to that point. Traders may be waiting for a view on the upcoming earnings season.
Lack of Economic Figures Bring News-Driven Day
No significant economic releases under usual circumstances would usually mean a day of trading sideways for the forex market and no major changes. That is not the case today though. Despite the lack of data forex brokers will be monitoring the daily news with close attention given the current global climate.
COVID numbers across the board from cases, to hospitalizations and fatalities are seeing huge spikes in the US and other countries. In America, more than 3,000 daily deaths are being reported even as the vaccine rollout begins to gather steam with now more than 9 million doses having been administered according to the CDC. China has also reported dozens of new cases.
Post-Brexit Pound Boosted
Sterling continued to bask in some post-Brexit sunshine displaying strength against a recovering Dollar. There were a few factors at play that helped the Cable strengthen, most of which come from the UK side. One of the major drivers here seems to be the cooling of talk on potential negative interest rates. Such an idea had been mentioned in recent months to help aid economic growth.
Bank of England Governor Andrew Bailey has poured cold water on that suggestion though. He commented that the idea was controversial, and with a lot of issues. This seems to have encouraged those forex trading the Pound. There have also been positive signs from an improving vaccine rollout in the UK. With three vaccinations officially approved, it seems Britain and the Pound are beginning to see the light.
Dollar Recovery Remains Cautious
Every aspect of the US economy has started Tuesday quietly. Wall Street has opened flat while the Dollar Index bounce back that had been in full swing last week, appears to have lost some momentum. With Q4 earnings season upon us, it seems that many traders are remaining cautious to get a gauge of how the figures are likely to emerge.
This could do a lot to determine the next direction of both the stock market and the Greenback. Stronger than expected sales from the big hitters could continue to drive a bullish equities market while the Dollar will need some help if it is to regain any major strength. This could mean pressure on stocks in return.