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DailyFX Morning Market Minutes: COVID-19 Update, UK on Track, Upcoming Holidays

DailyFX Morning Market Minutes: COVID-19 Update, UK on Track, Upcoming Holidays

Christopher Vecchio, CFA, Senior Strategist
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Market Minutes Overview:

  • According to Bloomberg News, the US administered north of 2 million vaccinations yesterday for the second time during the pandemic.
  • GBP/JPY and GBP/USD are working on multi-year bottoming efforts, another piece of evidence that the safe havens are potentially embarking on a rough go of sorts.
  • This Spring Festival Golden Week holiday coincides with US markets closed this coming Monday for President’s Day, meaning trading volumes should stay muted until at least Tuesday.

COVID-19 Update

New COVID-19 cases continue to drop in the United States, as do hospitalizations and deaths, per the COVID-19 Tracking Project. As my colleague Rich Dvorak has illustrated in a chart he shared this morning on the DailyFX Real Time Newsfeed, the drop in COVID-19 cases has coincided with the uptick in US vaccinations.

According to Bloomberg News, the US administered north of 2 million vaccinations yesterday for the second time during the pandemic. It’s noteworthy that Thursday-Friday-Saturday have typically produced the highest reported vaccination rates, which means we may be heading into a rather positive stretch of data coming over the coming days.

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Sky is Blue for UK

Speaking of positive data and COVID-19, how about the UK economy? The UK leads the G10 FX space with more than 20 vaccinations per 100 people, about 33% higher than the US. But the UK and the US are in a different class of their own relative to the rest of developed markets: Canada and various EU countries like Germany, Italy, and Spain lag far behind.

As we close out the week, John Lennon comes to mind when thinking about the British Pound’s performance around the vaccine news and recent economic data, including today’s GDP report: “The sun is up, the sky is blue, it’s beautiful, and so are you.” The post-Brexit UK economy is proving resilient, particularly relative to the rest of Europe and most of the developed world.

The charts reveal a similar story. GBP/JPY and GBP/USD are working on multi-year bottoming efforts, another piece of evidence that the safe havens are potentially embarking on a rough go of sorts. This aligns with the perspective offered by the weekly DXY Index chart, suggesting that a multi-year trendline break coupled with a double top has formed.

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Calmer Markets for a Few More Days

Lastly, heading into next week, it is the official start of the Chinese New Year, which means markets may be quieter for the coming days. This Spring Festival Golden Week holiday coincides with US markets closed this coming Monday for President’s Day, meaning trading volumes should stay muted until at least Tuesday.

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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