Sterling held firm early on Friday but gradually declined throughout the day. There were concerns over a slowdown in the delivery from the vaccination program throughout April, but the UK government is still positive that all adults can be vaccinated by the end of July.
The UK recorded its highest daily vaccine counts over the weekend, maintaining confidence in the underlying programme, but there were further concerns over UK/EU tensions surrounding vaccine supplies amid another threat to limit exports to other countries, including the UK.
Sterling opens just above 1.3850 against the Dollar and around the 1.1650 mark against the Euro.
The Federal Reserve (Fed) announced on Friday that exemptions surrounding the supplementary Leverage Ratio (SLR) would not be extended and would expire on March 31st. Markets had been focussed on this issue for several weeks amid fears that the reversion to previous rules would trigger sharp selling of US Treasury bonds and put upward pressure on yields, especially if foreign selling also remained a significant feature. Yields did move higher on the announcement and there were sharp dollar gains.
The US continues to outperform its G10 peers when it comes to the vaccine rollout (mainly vs. Europe) and the prospects of economic recovery in the post-pandemic era, all exacerbating the resilience around the buck.
Later in the US calendar, the Chicago Fed National Activity Index is due seconded by Existing Home Sales, all for the month of February.
The Euro was last seen trading against the Dollar just below the 1.1900 mark heading into the European session. Worries that events in Turkey will cause disruptions in other financial markets might continue to underpin the safe haven USD.
On the other hand, the single currency might struggle to gain any meaningful traction amid concerns about a new wave of COVID-19 infections in Europe and pandemic-related lockdown.
Data to watch
09:00 - USD - Fed Chair Powell Speaks
Posted in Daily Market News on Mar 22 2021