Here is what you need to know on Wednesday, July 21:
Markets are calm after rebounding on Tuesday, while the US dollar remains on a strong footing. The Delta covid variant and US infrastructure news stand out. Bitcoin recaptures $30,000 and gold hovers above $1,800.
Comeback: US stock markets bounced on Tuesday and recaptured roughly all the losses incurred on Monday when the S&P 500 had its worst day since May. The advance in American shares carried other bourses higher but failed to depress the dollar, which has been holding onto its gains.
Concerns about the rapid spread of the Delta covid variant prevail in various parts of the world prevail. US 10-year Treasury yields are hovering around 1.20%, off the lows.
Vote: The US Senate will hold an early test vote on an infrastructure bill later in the day. It is still unclear if it receives support from Republicans or from Joe Manchin (D-WV) the most conservative Democrat in the upper chamber.
EUR/USD is trading around 1.1760, close to the lowest since April, as tensions mount ahead of Thursday's European Central Bank decision. The ECB could implement the dovish shift it presented in its strategic review.
ECB Preview: Three reasons why Lagarde could hit the euro when it is down
GBP/USD is struggling to hold onto 1.36, two days after ditching coronavirus-related restrictions. The EU and the UK remain at odds about the Northern Irish protocol and worries about Britain's growth remain prevalent after a survey from Lloyds showed concerns about inflation, capacity constraints and staff shortages.
AUD/USD extended its drop under 0.73 after Australia reported a disappointing drop of 1.8% in Retail Sales and after reports that cases continue rising in Australia's largest cities. Moreover, Australia's Prime Minister Scott Morrison admitted that his country's vaccination rollout was "regrettable."
USD/CAD has surpassed 1.27 as oil prices remain depressed and ahead of the weekly release of US Crude Oil Inventories. WTI is changing hands below $67.
Turnaround Tuesday: Why some currencies recovered and others didn't?
Gold is trading around $1,800, marginally higher after Goldman Sachs set a forecast of $2,000.
Gold Price Forecast: XAU/USD eyes a sustained move below $1800 amid bearish technicals
Cryptocurrencies: Bitcoin has recaptured the $30,000 and has been extending its gains toward $31,000. Ethereum is also benefiting from a bounceback, changing hands above $1,850.
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EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
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