Dollar edges lower with yields, Bitcoin extends fall, retail, vaccine fears eyed

Markets remain calm amid the countdown to the Fed and ahead and lower US yields push the dollar lower. Europe is struggling with vaccine issues, US President Biden is reportedly mulling tax hikes, Bitcoin extends its fall from new highs and US Retail Sales are closely watched.

Stocks and yields: The S&P 500 Index hit a new all-time high on Monday and additional gains are on the cards. The calm mood is pushing US ten-year Treasury yields have dropped below 1.60%, pushing the dollar marginally lower across the board.

The Federal Reserve is set to walk a fine line between acknowledging improvement but refraining from hinting that it would bring forward rate hikes. The bank’s “dot plot” with economic forecasts will be closely watched.

Stimulus and taxes: US President Joe Biden is reportedly contemplating undoing his predecessor’s tax cuts, to pay for the recently approved $1.9 trillion stimulus plan and future infrastructure spending. Markets seem indifferent to potentially business-unfriendly policies.

US Retail Sales figures for February are set to show a decline in headline spending after a bump up in January, fueled by the previous government support.

EUR/USD is trading above 1.19 but below the highs. All of Europe’s large countries suspended using AstraZeneca’s COVID-19 vaccines, wary of a potential link to blood clots. The old continent – which is seeing signs of a new wave of coroanvirs – heavily relies on these jabs and the postponement implies a delay in the economic recovery. The European regulator says there is no evidence that the inoculations cause issues.

German Chancellor Angela Merkel’s CDU party is looking for a new direction after defeats in regional elections and ahead of the national poll in December. The German ZEW Economic Sentiment is set to edge higher amid optimism for a vaccine-led recovery and despite the recent delay.

Bitcoin is trading around $54,000, extending its decline from the highs over $60,000 achieved over the weekend. Ethereum is changing hands around $1,740 and XRP is relatively stable below $0.50.

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