Forex: Greenback stabilizes near the 2021 highs on a quiet start
The dollar held up early Monday after outperforming its rivals last week. The US Dollar Index (DXY) is hovering sideways above 96.00 as investors wait for the National Activity Index from the Federal Reserve Bank of Chicago and data on existing home sales for October. Risk sentiment appears to be improving at the start of the week, but market participants remain concerned about the possible imposition of lockdowns related to the coronavirus in Europe.
False comments by Fed officials boosted the dollar ahead of the weekend. Federal Reserve Vice Chairman Richard Clarida said that December may be appropriate to discuss accelerating the reduction in bond purchases. The Fed Governor Christopher Waller made a similar statement, saying that the Fed could start curbing bond purchases by USD 30 billion in January and open the door for a rate hike as early as April.
The Shanghai Composite Index is up more than 0.5% despite some cautious comments on the economic outlook. Liu Shijin, an advisor to the People’s Bank of China (PBOC), said Monday that the Chinese economy could enter a “quasi-stagflation” phase of relatively slow growth and excessively high producer price inflation. Meanwhile, US equity indices futures are seeing slight gains, suggesting that the major indices on Wall Street could open on solid foundations. Meanwhile, US 10-year Treasury yields hold above 1.5% after Friday’s decline.
EUR / USD continues to struggle to make a convincing rebound and trades below 1.1300. Later in the day the European Commission will release preliminary November consumer confidence data.
GBP / USD fell sharply on Friday, giving up most of its weekly gains. The pair remained relatively calm around the 1.3400 level on Monday, but the lack of progress in negotiations on the Brexit protocol for Northern Ireland is keeping the pound out of demand.
Gold fell towards the lower end of its weekly range on Friday and broke below $ 1,850 during Asian trading on Monday. XAU / USD is likely to react to fluctuations in US Treasury bond yields as no major data is released.
USD / JPY is trading in a very tight range above 114.00 on Monday. The Japanese government had previously announced on Friday that the cabinet had passed a new stimulus package with expenditures totaling JPY 55.7 trillion.
AUD / USD is holding in positive territory around 0.7250 and NZD / USD continues to move sideways above 0.7000. Risk flows appear to be helping the Aussie and Kiwi hold their own against the dollar.
USD / CAD consolidates last week’s gains above 1.2600 as the oil sell-off appears to be pausing on Monday. After losing more than 4% on Friday, the West Texas Intermediate (WTI) barrel is trading just below $ 76.00 in early European trading.
Cryptocurrencies: Bitcoin climbed to $ 60,000 on Saturday but failed to build enough bullish momentum to get past that level. At the time of this writing, BTC / USD was down more than 2% at $ 57,300. After a rebound that lasted for two days, Ethereum turned south on Sunday and continues to push toward $ 4,000 on Monday.