The euro is in free fall against the dollar trading near its lowest levels this year as the EU continues struggling with the vaccine rollout. European politicians are pointing fingers at each other as cases rise and the population is frustrated with lockdowns. However, the EU is lagging behind the US where inoculation is gaining traction while around 90% of Americans will be eligible for a vaccine by April 19.
The British pound was little changed. The UK continues to reopen its economy and Covid-19 cases are falling providing support against the strengthening dollar.
The Japanese yen weakened strongly. The interest rate differential between the US and Japanese government bonds is widening, pushing up the currency pair well above the 110 level.
Overall, the dollar index climbed on an improved US economic outlook, while US yields pushed higher continuing to underpin the US currency.
Gold prices continued to fall and traded below the $1,700 level on Tuesday. The rise of US bond yields and gains in Bitcoin’s price are pulling down the yellow metal price.
The S&P 500 Index approached another all-time high level on an increase in investor risk appetite. Fiscal stimulus is well received by investors, while President Biden is set to present his colossal infrastructure spending plan on Wednesday.
Oil prices slightly rose last week. The Suez Canal opened up on Tuesday after days of blockage due to a stranded cargo ship. The focus turned to an OPEC+ meeting on Thursday where supply quotas will be discussed amid new coronavirus pandemic lockdowns. However, a stronger dollar is weighing on oil prices.