US Dollar Keeps Steady as European Markets Erase Daily Gains

25 Jan 2021 · 3rd Party Analysis

US Dollar Keeps Steady as European Markets Erase Daily Gains


In Summary

  • Double-dip recessions already evident across the globe
  • Investors anticipate tech companies earnings reports

The US dollar is keeping steady against the euro in the initial hours of the European trading session. The EURUSD is hovering lower on the day, currently towards 1.2150. Last week the exchange rate started climbing from a Monday low of 1.2053 to close the week higher by nearly 1% at 1.2166. Today, as the European markets struggle for a direction, the EURUSD continues its gradual move to the upside with an intraday high of 1.2183.

European markets on Monday opened in green territory but eased off their early highs as investors and traders are caught between the prospects of more stimulus and the worsening pandemic. The World Bank trimmed its growth predictions for 2021 as the rollout of the coronavirus vaccine will take more time than expected initially. Additionally, in various parts of the world, there is already a double-dip recession as many countries are under severe lockdowns, which is heavily impacting the state of the economy

Opposition Likely for parts of the stimulus package

In Washington, Joe Biden’s first legislative priority as President is a $1.9tn spending package. The impeachment of former President Donald Trump also features strongly. It is not yet known which will be first on the agenda, however, congressional leaders have agreed to start the impeachment trial on Feb 8. There are also talks of negotiating the relief package in the next two weeks. There are certain elements of the package that Republicans are ready to embrace which could potentially include an increase in direct stimulus checks. Congress has already passed $600 in relief aid per individual. President Biden is now pushing for another $1400 up to a total of $2000. Some Republicans have accepted and supported the proposal because former President Trump had been supportive of it. A few other provisions such as direct funding for schools and an acceleration of the vaccination program are also popular among Republicans. However, President Biden and the Democrats will certainly face tough opposition as Republicans are not yet ready to accept the whole deal.

US equity futures are flashing green in premarket trading as futures tied to the Nasdaq Composite Index indicate a higher open by nearly 1.00%. DJIA and S&P500 futures are also pointing to mild gains at the opening. This week will be the busiest of the earnings season as market participants brace for stock volatility. 118 companies in total are set to report fourth-quarter earnings in the final week of January. Anticipated results from big companies like AT&T, Apple Inc., Facebook, and Tesla will be closely monitored by investors.

Apple, Facebook, and Tesla are scheduled to report on Wednesday afternoon. Tesla’s numbers will be the first to be reported since the EV company became a member of the S&P500. The carmaker already disclosed deliveries for 2020, beating analyst expectations and landing at 499,550 delivered vehicles globally. Apple’s results are among the highlights of this earnings season as the tech company released new iPhones in the fall. Facebook is expected to post strong results on the back of high advertising activity during the holiday season.

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