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USD: Stock market volatility is less than expected

Block trades linked to Archegos Capital Management stock exposure likely contained the contagion more than expected, allowing the large equity segment to hold on to recent gains during the Asian session. As the data calendar in major economies appears to be quite dull, this is likely to remain a key thread under investors’ scrutiny. Two Federal Reserve speakers are unlikely to pique interest in the United States. The announcement of President Biden’s infrastructure plan on Wednesday is expected to be the highlight of the week, with another bold fiscal step further endorsing the narrative of US exceptionalism in the economic recovery.

This narrative was bolstered this week by Biden’s announcement that 90% of adults would be able to get a vaccine by April 19th. Although the dollar may benefit from the infrastructure plan announcement, G10 currencies may continue to move in opposite directions, with commodity currencies bid and the euro and Swedish krona on the one hand and the Japanese yen on the other. After breaking above the 110.00 mark, the USD/JPY can extend its rally.