UK Employment Data, US Rate Meeting and President Biden Signs Executive Orders on Relief Package
Last week the global focus was on President Joe Biden inauguration as he became the 46th President of the United States and signed a flurry of executive orders, including addressing the COVID health crisis. Following his inauguration, the US Dollar weakened as speculation grew of the passing of the $1.9 trillion economic relief plan. This improved risk sentiment and pushed up equity markets; subsequently resulting in a weaker US Dollar. The other big focus was the ECB meeting where there were comments from various central bankers about the strength of the currency. As expected, the ECB held interest rates at 0.0% following the latest council meeting and also made no changes to the asset-purchase programme with bond buying under the PEPP programme continuing until at the least March 2022. The statement did note that the full envelope of bond purchases did not need to be used if there was an improvement in financing conditions. The central bank also stated that they are ready to recalibrate policy if there is a negative inflation shock over the next few months. ECB President Laggard stated that the bank was monitoring the forex rate very carefully and that currency appreciation is a drag on inflation. Laggard also stated that risks to the growth outlook were tilted to the downside, although the risk is now less pronounced. Given the absence of dovish references within the meeting and a weak dollar, the Euro strengthened. Sterling has remained resilient as the vaccination program continues to be