Forex Today: Risk off keep investors on their toes
|What you need to know on Friday, July 9:
Risk aversion dominated financial markets. Signs of slowing global growth and resurgent coronavirus cases are behind the sour mood. The rapid spread of the Delta variant is arising concerns in Europe, where governments are imposing some restrictions to try to curb contagions.
The EUR/USD pair advanced to 1.1867 but retreated afterwards to settle in the 1.1840 price zone. Meanwhile, the European Central Bank has shifted to a symmetric inflation target of 2% contrary to a ceiling at that level, allowing higher inflation to compensate for previous undershooting. President Christine Lagarde said that they “expect inflation in the medium term to stabilize below our objective.” “Our inflation projections for this year are around the 2% mark – which is something we haven’t seen in more than eight years.”“The increase in prices should nevertheless slow to 1.5% in 2022 and 1.4% in 2023. “
The Swiss Franc and the Japanese yen were the best performers against the greenback, holding on to intraday gains ahead of the close. Commodity-linked currencies, on the other hand, were the ones that suffered the most, with USD/CAD regaining the 1.2500 threshold and the AUD/USD pair falling to a fresh 2021 low of 0.7416.
Gold advanced with the dismal mood and hit an intraday high of $1,818.37, but trimmed gains during the US session, to finish the day with modest losses at around 1,800. Crude oil prices recovered modestly after the previous slump, with WTI ending the day at $ 73 a barrel.
European indexes closed in the red, while US indexes posted substantial losses, despite bouncing off intraday lows. The DJIA lost over 300 points.
US Treasury yields fell to fresh multi-month lows. The yield on the 10-year note plummeted to 1.25% to finally settle at 1.29%.
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