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Bannockburn Global Forex Market Drivers for the Month Ahead April 1, 2021 View Online Economic Calendar April 6 - Reserve Bank of Australia meeting April 7 - Reserve Bank of India meeting April 13 - Reserve Bank of New Zealand meeting, US March CPI April 15 - Turkey Central Bank meeting, China’s Q1 GDP April 21 - Bank of Canada meeting April 22 - ECB meeting April 23 - Russia central bank meeting April 27 - Bank of Japan meeting April 28 - Federal Reserve meeting April 29 - US Q1 GDP April 2021 FX Outlook The dollar fell in the last nine months of 2020 but rebounded in the first part of 2021 and accelerated in March. The main driver that spurred the mainly short-covering dollar rally, which does not appear complete, was the three-prong divergence. The fiscal stimulus that will generate a projected budget deficit of more than 14% of GDP is head and shoulder above what other countries can or want to provide. The Federal Reserve continues to pursue an aggressively accommodative monetary policy, with no signs that it has begun even considering tapering the $120 bln of long-term assets being purchased every month. After what seemed like a slow start, the vaccine rollout in the US is improving rapidly. By the middle of April, all adults are projected to have access to the vaccine. These considerations point in the same direction of stronger US growth and higher real and nominal interest rates, and underpin the dollar. Yet, the divergence is unlikely to be sustained in the medium-term, leaving the greenback vulnerable to a reversal. Click Here to Read the Full Monthly Outlook