Inflation has been the main concern in forex market

Vrasidas Neofytou
Head of Investment Research

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Inflation has been the main concern in the forex market as the soaring consumer and commodities prices have renewed talks of policy tightening by Central banks.

The US dollar continues underperforming across the board, as the Federal Reserve downplays the rising inflation as “transitory”, reiterating its accommodative monetary policy until the US economy hits its targets for maximum employment.

Euro has climbed back above 1,22 level for the first time since February, as the successful vaccination program, and the relaxation of lockdown measures have improved the outlook for European economies.

The British pound maintains its latest breakout above 1,41 to the dollar, posting fresh yearly highs driven by the gradual lifting of coronavirus restrictions in Britain, and the improvement in the employment market.  

The Canadian dollar has been the best performing G10 currency against the dollar in 2021 so far, lifted by the higher crude oil prices and as the Bank of Canada was the first central bank to taper asset purchases.

As the global recovery is gaining momentum, the growth-related Australian and New Zealand have been outperforming across the board, as the prices of copper and iron ore hit multi-year highs.

In the cryptocurrency market, Bitcoin broke below 40,000 dollars while rival digital currency Ether also dropped below 3,000 dollars after China banned its financial institutions from providing services related to cryptocurrency transactions.

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