Heavy dollar selling kicks in
The US dollar is taking a big hit at the moment, particularly against CAD, other commodity currencies and the pound.
If you’re looking for explanations, you’re come to the wrong place. It’s quarter end and this is the way it goes. The London fix at the top of the hour will mean even more whippy moves.
Citi yesterday highlighted the chance of USD selling but said it would be ‘moderate’. At the moment, it’s anything but moderate.
The White House releases a statement ahead of Biden’s speech later today
- $620 billion to be dedicated to transportation
- $650 billion to be used for initiatives to improve quality of life at home
- $580 billion to strengthen US manufacturing, research and development
- $400 billion to address improved care for the elderly, people with disabilities
- Tax increases to “fully pay for the investments in this plan over the next 15 years”
- Proposes US corporate tax rate to go up to 28% from 21%
As a reminder, Republicans slashed the corporate tax rate from 35% to 21% back in 2017 so even the “hike” here isn’t as heavy; it is likely to be watered down surely.
But still, it won’t be music to the ears of big corporates and as the debate ensues in Congress, expect the whispers and musings to have an impact on market sentiment.
Further measures to tackles the virus crisis may be announced
Just a heads up as this is now put on the agenda. Macron will be making a televised announcement at 2000 local time (1800 GMT), so look out for that.
Latest data released by ONS – 31 March 2021
- GDP -7.3% vs -7.8% y/y prelim
- Private consumption -1.7% vs -0.2% q/q prelim
- Government spending +6.7% vs +6.4% q/q prelim
- Exports +6.1% vs +0.1% q/q prelim
- Imports +11.0% vs +8.9% q/q prelim
- Total business investment +5.9% vs +1.3% q/q prelim
Slight delay in the release by the source. The preliminary report can be found here.
There are quite a number of notable revisions to the report, with consumption seen much weaker than initially estimated while business investment has been revised to being much higher than seen in the preliminary data.
In any case, the slight bump higher reaffirms the resilience in the UK economy despite the November lockdown at the time. Q1 economic conditions are likely to take a hit amid tighter restrictions but the outlook for 2H 2021 looks bright amid the quick vaccine rollout.