US Open Note – Stocks gain some footing; coronavirus dejavu-jitters linger
- Anthony Charalambous
Markets seem to be gradually regaining consciousness from yesterday’s risk-off blow even as yields are on the back foot. That said, the US recovery is clearly ahead of other lagging economies and may start to make headways again as uncertainty and delta variant related concerns start to establish themselves elsewhere.
The dollar index is flirting with the 93.00 mark and is holding up fairly well in the forex arena despite the 10-year yield lower at 1.15%. The reserve currency’s appeal in risk-off scenarios seems to hold and is assisting the greenback. It seems the Fed and other central banks may have to take into consideration the recently more upbeat tone around recoveries and possibly nearing taper talks, given yesterday’s developments and the uncertainty around stimulus due to infection surges and resilience of the delta strain of the virus.
US building permits decelerated in the month of June coming in at 1.60M however, a stronger number of new constructions of 1.64M versus the forecast of 1.59M, may suggest jobs and housing demand remains robust.ECB and BoE
The ECB remains a dove and will stay accommodative during the recovery, making sure not to jeopardize the progress it has been making. That is why Thursday’s ECB meeting remains the highlight of the week, regarding stimulus for the Eurozone moving into the second half of the year. As the UK economy fully reopened, the Bank of England is torn between slightly higher inflation and premature tightening of monetary stimulus.
The UK reopened fully yesterday and infections continue to rise, which has shifted the UK into the highest travel advisory alert, hardly aiding the pound’s recent deteriorating picture.
The euro and the pound continue to hold bearish trajectories as the dollar remains resilient even as risk off sentiment begins to subside somewhat. The euro’s $1.1800 level seems to be capping the common currency’s advances, while the pound is dipping closer to the $1.3600 handle. That said the euro holds an upper hand over the pound with the EUR/GBP pair currently reaching 0.8655.Uncertainty Down under
The RBA rhetoric was somewhat dovish as uncertainty around growth of the economy was revived with recent virus outbreaks and lockdowns. Nonetheless, under the uncertain circumstances the RBA will remain more flexible towards the state of the economy at specific times rather than staying committed to a rate of asset purchases. The AUD/USD pair has touched the 0.7300 handle but remains directed for the 0.7250 low.Oil and loonie injured
The nomadic delta variant, which continues to travel unscathed throughout the globe, has boosted worries that recoveries may adopt a sluggish pace, resulting in a slump in demand for oil. WTI futures are trading around the $66.00 per barrel mark, looking increasingly heavy, following OPEC’s agreed supply increase. On that note, the USD/CAD pair is relatively unchanged at C$1.2760, holding in the vicinity of its recently achieved highs. This may be due to the dollar’s retained buoyancy and a wounded Canadian dollar, resulting from oil’s recent delta-jolt.Later in the evening at 23:50 GMT Japan’s minutes will be due, while at 01:30 GMT Australian retail sales m/m are scheduled to be released.
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.