Just like yesterday, the dollar and risk sentiment is improving together this morning, which is a rare occurrence.
Overview
However, the Bloomberg Dollar Index is only slightly higher. The decline in the so-called “Meme stocks” and the apparent retreat of Reddit-fueled retail traders are seen as a boon to equity markets in general. Progress on the fiscal stimulus front is also a reason to be optimistic. Democratic congressional leaders moved ahead with the budget reconciliation process which would allow President Biden’s large stimulus plan to pass the Senate with a simple majority.

There is also good news on the vaccine front. 26.5 million Americans have received at least their first dose of the Covid-19 vaccine which, for the first time, exceeds the number of people who have tested positive for the virus. According to Bloomberg News, the U.S. has been administering shots at a faster daily rate than any country in the world, giving 1.34 million doses a day.

There is no major economic data on today’s docket but there is a slew of earnings reports due out today which may steer risk sentiment. The Federal Reserve’s Mester and Kaplan will be speaking on the economy this afternoon.
EUR ⇓
The Euro was under pressure overnight and fell to the lowest level since December of 2020. One of the reasons for the sell-off is likely the widening discrepancy in the success of the vaccine rollout between the U.S. and the European continent. As stated above, the pace of inoculations has picked up in the U.S. while rollout attempts in many European countries as faltered.
EUR/USD is down 2.4% from its high on January 6th.

MXN ⇑
The Mexican peso experienced the biggest gains among major currencies and was one of the few currencies to eke out gains versus the greenback overnight. Indeed, the peso gained 0.9% against its American rival. The peso’s rally comes even as the price of silver fell 6.3% after the precious metal reached an eight-year high yesterday when Mexican markets were closed. While not a “meme stock”, silver had been targeted by social-media powered retail traders as a possible candidate for a “short-squeeze.”

Mexican January Markit PMI will cross the wire at 10:30 a.m. EST.