The safe-haven FX continues to lead the race this week as investors take cover from fresh Covid concerns. The market continues to take a clue from the development around the virus and the mass reaction both from policymakers and the economies.
The US dollar stays on the front foot, supported by a good number of factors. First, as a safe haven, the greenback is one of the most preferred since the outbreak of the delta variant. Aside from this, the recent Fed’s comments on tapering on the back of Friday’s NFP surge has continued to fuel the greenback rally ahead of Wednesday’s inflation reports.
Meanwhile, the dollar was joined by the Japanese Yen but with the lockdown in Japan following the delta variant outbreak, one would expect the dollar to outpace the latter in the coming days especially if the US inflation data drops below market expectation. However, the Swiss Franc was the laggard on Monday and has remained so on Tuesday maintaining high volatility. At the start of the new day, CAD has resumed the late last week’s resurgence while the oil price makes an important recovery. Euro remains unimpressive as it lags behind the Pound Sterling which has seen a sharp recovery early in the London session.
In the equities market, recovery continues especially for the Asian market, following the July sharp decline. The US stock market is picking up some pace and is on course to hit another record high. Although there is Covid, there is now a general consensus that the world can live through it. The optimism is expected to offset fresh Covid development unless the latter takes an unexpected devastating turn.
Meanwhile, in the commodities market, it’s been a bearish month. The talks have been more on Gold. Rising treasury together pressured the metal close to the 1677 support after the very dogged 1800 supply line was eventually breached. The bearish force seems to be intact despite the quick recovery back to 1733. The oil market has a similar flow as WTI plummeted close to $65 before the current retracement to $67.6. After the last month OPEC+’s decision to add to supply despite the new wave of the virus, WTI has declined close to 10% baring the current recovery.
Bitcoin and its cohorts are recovering impressively from the nearly 3-months bearish correction. Since July 22, BTC has gained over 55% as it eyes $48,000. The late May to late July range run has ended and eventually broken to the upside. The premier crypto might face resistance at the $47,000-50,000 resistance zone before pushing further. Ethereum also maintains the lift above $3,000 while Ripple eyes 85 cents.
The economic calendar is light today. However, The Eurozone ZEW economic sentiment could force the EUR out of the current range. The main event is scheduled for tomorrow as the United States releases the last month’s CPI data and makes updates on inflation. However, apart from the economic calendar, traders should watch out for developments around the delta Covid variant.
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