The Swiss franc took the top spot this week as traders juggled risk against the backdrop of continued rising pandemic concerns, the Fed, and a regulatory crackdown in China.
Notable News & Economic Updates:
Asian shares skidded on Monday as concerns over tightening regulations upended Chinese equities
U.S., China still disagree on way forward after tense talks
Oil falls as coronavirus, slower China imports hit demand
South Korean economy grew by fastest pace in a decade at 0.7% in Q2
CDC to reverse indoor mask policy, saying fully vaccinated people should wear them indoors in Covid hot spots
China industrial profits rise 20% y/y in June
IMF warns that inflation could prove to be persistent and central banks may need to act
Coffee prices surge as unusual cold threatens Brazilian production
IMF raises growth forecasts for rich nations, dims outlook for developing world
Oil rises on U.S. fuel drawdowns despite surging coronavirus cases
Fed says economy continues to ‘strengthen,’ cites progress on bond taper goals
China stocks rally on Thursday as Beijing intensifies effort to calm market
CDC warns that delta variant is as contagious as chickenpox and may make people sicker than original Covid
S&P 500 closes Friday lower as Amazon shares slide, but notches sixth straight positive month
Intermarket Weekly Recap
Markets were in mostly in standby mode to start the week as trader awaited the highly anticipated monetary policy statement from the Federal Reserve. There was a bit of a risk-off vibes, though, due to the crackdown in China on tech companies, and likely on continued pandemic concerns as the number of new covid-19 cases continues to accelerate around the world. With both themes as the main drivers ahead of the Fed, it looks like all asset classes had trouble staying in the green through the Wednesday session.
We finally get to the Fed event during the Wednesday U.S. trading session, and as expected, they held off on any policy changes despite citing the continued economic recovery and rising inflation conditions. They did disappoint some though as their rhetoric on tapering wasn’t as strong as expected given the strength of inflation and the economy. This is likely why we saw the U.S. dollar and U.S. Treasury yields dip after the event, which was likely the catalyst for gold and oils initial rally through Thursday.
Crypto was a volatility outlier at the start of the week as Amazon bitcoin adoption rumors hit the wires on Monday, sparking a short squeeze in bitcoin, which pulled up the rest of the crypto space. It wasn’t too long that those same rumors were denied, leading to swift pullback at the end of the Monday session. Based on price action, this didn’t sway the crypto bulls as this apparently was another buying opportunity, taking the space back to Monday highs and beyond. Bitcoin traded 12% over the Sunday open at the close of the U.S. session on Friday.
In the forex markets, the majors were almost as mixed as the rest of the financial space due to individual catalysts and drivers, but there was a reflection of the broad risk-off sentiment as the comdolls underperformed (with exception of the Canadian dollar) against the “lower risk” European currencies. The biggest loser was the Australian Dollar (likely on Australian lockdown measures and expectations that the RBA may hold off on bond tapering), while the Swiss franc took the top spot being the most attractive “safe haven” for the week.
USD Pairs
U.S. New home sales dropped 6.6% in June vs. +3.4% forecast
Texas Manufacturing Activity was largely unchanged at 31.0
U.S. consumer confidence holds steady at a 17-month high in July
U.S. home prices broke records in May, according to S&P Case-Shiller
Richmond Manufacturing Index ticked higher in July to 27 from 26 in June
U.S. mortgage applications rise in latest week as rates decline
Fed holds rates near zero, says economy has gotten better even with pandemic worries
U.S. goods trade deficit widens on imports; inventories increase
U.S. Senate advances roughly $1 trillion bipartisan infrastructure bill
U.S. GDP rose 6.5% last quarter, well below expectations
U.S. economy contracted 19.2% during COVID-19 pandemic recession
Services boost U.S. consumer spending in June; inflation increases
Chicago Business Barometer Rose To 73.4 in July
GBP Pairs
BoE’s Vlieghe says economy needs help for at least several quarters
UK Covid cases fall below 25,000, latest daily data shows
UK retail sales dip slightly in July after post-lockdown jump-CBI
Britain reports highest deaths from COVID-19 since March as Johnson urges caution
UK consumers get inflation relief as shop prices fall again – BRC
UK house prices fall in July as tax cut is scaled back – Nationwide
U.K. mortgage approvals fell to their lowest level in almost a year in June
EUR Pairs
German business morale down on supply shortages, virus fears
ECB’s Holzmann says central bank’s new policy guidance was a ‘step too far’
German consumer morale steady heading into August- GfK
ECB strategy may mean temporary inflation overshoots: accounts
German unemployment falls in sign of continuing recovery
Germany Preliminary Inflation rate for July 2021: +3.8%
Germany’s economy expands less than expected in Q3
French Q2 preliminary GDP up 0.9% q/q, slightly above forecasts
Flash Euro area annual inflation up to 2.2%
CHF Pairs
Swiss KOF Economic Barometer dips to 129.82 from 133.34
CAD Pairs
Overlay of CAD Pairs: 1-Hour Forex ChartOverlay of CAD Pairs: 1-Hour Forex Chart
Canada Annual CPI Decelerates to 3.1% in June
Central bank chief says Canadians should not ‘overreact’ to temporary inflation
Canadian Government extends pandemic recovery programs and business supports
Canada Industrial Product Price Index was 0.0% in June
NZD Pairs
New Zealand Has NZ$261 million trade surplus in June
New Zealand ANZ business confidence index down from -0.6 to 3.8 in July
AUD Pairs
Overlay of AUD Pairs: 1-Hour Forex ChartOverlay of AUD Pairs: 1-Hour Forex Chart
Australian CPI blows hot in Q2, core inflation far cooler
Sydney lockdown extended by four weeks as Australia Covid-19 cases spike
RBA Deputy Governor gives speech on the FX Global Code
Australian import prices up 1.9% in Q2 2021
Australia central bank seen reversing taper decision as lockdowns hit economy: Reuters poll
JPY Pairs
Japan’s July factory activity grows at slowest pace in 5 months – PMI
Japan services PPI growth slows in June
BOJ must avoid premature tightening -opinions from July meet
Japan urges young people to get jabs and stay in amid Tokyo Covid surge
