Forex news from the European trading session - 3 August 2021
Headlines:
- Fed's Bullard says that wants end of crisis-era policies to begin soon
- Eurozone June PPI +1.4% vs +1.3% m/m prior
- ICYMI: Beijing has cut transport into the city to guard against COVID-19 surge
- Tokyo reports 3,709 new COVID-19 infections in the past day
- JMA chief warns medical system is coming under strain from COVID-19 infections
- Aussie jumps as RBA sticks to tapering plan
- RBA leaves cash rate unchanged at 0.10% in August monetary policy decision
- China market regulator launches investigation on auto chip distributors
- China to test all Wuhan residents for COVID-19 amid delta variant outbreak
Markets:
- NZD leads, USD lags on the day
- European equities higher; S&P 500 futures up 0.3%
- US 10-year yields up 1.7 bps to 1.188%
- Gold down 0.3% to $1,808.70
- WTI up 0.3% to $71.48
- Bitcoin down 1.0% to $38,486
The tail-end of Asia Pacific trading featured the RBA August policy decision and the central bank surprised by sticking to its tapering plan despite the concern about the spread of the virus in NSW, which is almost certainly going to put a damper on Q3 GDP.
The aussie jumped on the headlines with AUD/USD moving up from 0.7365 to 0.7408 before seeing gains limited closer to the 0.7400 level and is holding just below that.
AUD/NZD also pared its earlier decline briefly, moving up from 1.0530 to 1.0560 before slipping to 1.0540. The kiwi is the lead gainer as it inadvertently benefits from a stronger aussie on the session, with NZD/USD moving up from 0.6995 to 0.7015.
The dollar is on the softer side once more as it continues its post-Fed struggles, with EUR/USD seen moving up from 1.1870 to 1.1890. GBP/USD also climbed from 1.3890 to 1.3930 levels, keeping just above its 100-day moving average @ 1.3919 now.
Meanwhile, USD/CHF is seen falling from 0.9050 to 0.9023 - fresh lows in seven weeks.
Risk sentiment is holding up more positively despite COVID-19 fears, with China taking strict measures to try and curb the latest outbreak in the country amid the spread of the delta variant. US futures are up slightly, as are European indices.
Elsewhere, Treasury yields are steadier after the drop yesterday but the technical picture still isn't pretty in the bond market and that is a reminder that the dangers to risk sentiment haven't exactly abated for the time being.
