Talk of a third wave taking hold continued yesterday with the prospect of the 21st June being moved back a few weeks in a wait and see strategy.

Scientists have suggested that everything is under control at this point however there is every possibility as households start to mix even more. Most in the UK have become virologists over the last 12 months and people understand that when a outbreak happens the hospitalisations and deaths come a few weeks later. The UK reporting a zero death day earlier this week suggests the vaccines despite the new variant are doing their jobs.

Boris Johnson also yesterday suggested a moving around of the countries on the warning lists hinting that amber and red countries could move around, with some interpreting this as some countries will be going backwards and more restrictions coming into place.

Travel restrictions from the UK whilst frustrating may act as a catalyst to UK economic performance. If the UK staycation market continues through the next few months there will be huge spending levels in the UK itself rather than abroad. This will only help to improve the UK economy and could mean we start to see Sterling’s value rise in the coming months. Especially after talk of a interest rate hike early next year large domestic spending could set that in stone.

Eurozone economic recovery

Eurozone Economic Recovery

The European Union economy is growing much faster compared to last year, this is due to the fast rollout of covid vaccine which has helped ease some coronavirus restrictions. However there are still some curfew and restrictions in place in certain areas of Europe such as Germany and France. For instance in France the public has to follow the government guidelines and not leave their home. The new curfew time will be effective from 9pm to 6am. This will give business the opportunity to do sales for an additional few hours in a day.

The European Union has managed to vaccinate almost 30% of the population despite having the first batch of the AstraZeneca vaccine delivery being extremely delayed. Europe has come to a conclusion that no additional investment will be made in purchasing AstraZeneca vaccine.

Next update in France on the 9th of June there could be potentially more ease of the coronavirus restrictions which means cinemas, restaurants, pubs, play areas, activity and shopping centres will reopen with certain number of people at a time being allowed.

The EU has delayed UK being on the green list due to the high number of cases of coronavirus and the Delta variant which was first identified in India. The reason for the delay is to prevent an variant entering the country and effecting the economy.

The European championship is approaching this year which should have taken place last year. The championship was postponed due to Covid19. This potentially could help boost the European economy but taking current situation into consideration and the health risks it is unlikely many fans will be able to attend.

Flood of Economic Data Tomorrow That Could Impact USD Exchange Rates

There could be a busy end to the week for the US Dollar as Non-Farm Payroll and Unemployment data stake centre stage tomorrow. These are indicators of the number of new jobs created in the market and the percentage of working population not currently in jobs. Both are expected to show improvements from previous months and could help the US Dollar find a boost.

Jerome Powell who is the Chairman of the Federal Reserve might currently be one of the most eagerly watched people in US Politics at the moment as he is presented with the task of keeping the US economy at just the right temperature. The Federal Reserve have kept their cards very close to their chest over the least few weeks and months as there are calls for interest rate hikes. However Powell has been waiting to see if the unemployment rate continues to fall before taking any action.

Before the Pandemic hit the US Unemployment rate was just under 5% and it is forecast to be 5.9% tomorrow. A move down to the lower 5% level and we might start to see some increased urgency from the Federal Reserve. President Joe Biden has demonstrated a keen eagerness to spend big with his budget which presents a real danger of inflation rising as the US print more money.

If the Federal Reserve choose not to act and keep holding on waiting for unemployment improvements then we could see the US Dollar continue on a 6 months trend and lose value over the coming months. This could mean anyone looking to buy US Dollars may start to see multi year highs in the near future.

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