Markets began to take a cautious stance with the US dollar strengthening against most major currencies on Monday following fears of a Covid-19 pandemic contagion. At the same time, market players are waiting for more indications of a global economic recovery before taking action.
The market so far remains sensitive to any discussion of a reduction in bond purchases while watching U.S. inflation data on Tuesday ahead of Federal Reserve Chairman Jerome Powell’s speeches on Wednesday and Thursday.
Meanwhile, the shock taken by the People’s Bank of China through the announcement of monetary policy easing to enhance the post-Covid-19 economic recovery failed to provide lasting momentum.
According to Marshall Gittler, head of investment research at BDSwiss Holding, the move also signals that the authorities are also concerned about China’s growth prospects.
Based on a survey by Reuters, economists expect U.S. consumer prices for June to rise 0.4% from May and 4% from the previous year. Any sign that rising inflation will continue could lead to the possibility that the Fed will reduce economic stimulus.
On the other hand slower data could carry the possibility that the Fed will maintain the policy in place for a longer period of time. This will indirectly encourage market players to trade in risky assets or currencies.
At the time of writing, the dollar index, which measures the strength of the greenback against six other major currencies, traded stronger by 0.23% at 92.250.
The sterling currency depreciated 0.26% to $ 1.3863 while British Prime Minister Boris Johnson is expected to confirm plans to remove Covid-19, despite a significant increase in cases.
