The dollar looks set to correct further

Whilst fears of the new covid variant triggered the dollar’s demise on Friday, there were technical signals to suggest a correction was due anyway.

FOREX 3

The shock to the system on Friday had traders assuming the worst, which is pending lockdowns and lower growth as a consequence. Markets traded accordingly to send equities, commodities and bond yields lower. Yet the US dollar didn’t get a safe haven bid. And that is because fears also arose that the Fed would be much less inclined to increase the speed of their tapering, as had been the theme over the prior week. In fact, we could go as far to say that it could cause the Feed to slow down their tapering. And if they do that, it simply pushes back hopes of a rate hike, and weighs on the dollar accordingly.

 

 

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