Forex Today: Dollar drives higher on fears, ahead of Retail Sales, Powell

Yohay Elam FXStreet

Here is what you need to know on Tuesday, August 17:

The market mood has soured amid a fresh Chinese techlash, covid fears and uncertainty ahead of US Retail Sales and Fed Chair Powell's speech later in the day. Antipodean currencies are hit hardest while gold benefits from falling yields and cryptos stabilize.

Risk-off: Markets are suffering yet another "hangover" following record highs on the S&P 500 and other US stock indexes. China is moving against "idle culture," a call which is seen as hitting videogames and other activities, as part of its backlash against powerful tech companies. Asian shares are struggling and dragging others lower.

COVD-19 cases continue rising in the US and weigh on the recovery, but the dollar is gaining with safe-haven flows across the board.

Coronavirus is hitting hard antipodean currencies hard. AUD/USD has tumbled below 0.73 after the Reserve Bank of Australia's Meeting Minutes revealed uncertainty about the economy following covid-related lockdowns.

NZD/USD has tumbled by over 1% and below 0.70 after one coronavirus case in Auckland prompted the government to order a snap three-day nationwide lockdown, with longer restrictions in several regions.

GBP/USD is sliding toward 1.38 amid dollar strength and amid mostly upbeat jobs report. The UK Unemployment Rate fell to 4.7% in June and wags are up 8.8% YoY. Jobless claims disappointed with a minor 7.8K drop.

EUR/USD is hovering closer to 1.17 in response to the risk-off mood. Growth is expected to be confirmed at 2% in the second quarter.

US Retail Sales are forecast to show a minor drop in the overall volume of consumption and a minor rise in core measures in July after robust figures in June. Investors are eyeing the impact of rising inflation and the Delta covid variant on shoppers.

US Retail Sales Preview: Dollar booster? Low expectations, market mood point to a clear reaction

Jerome Powell, Chair of the Federal Reserve, is scheduled to speak late in the day and could refer to the timing of the bank's tapering of its bond-buying scheme. Officials at the central bank have been moving to support an announcement as soon as September and both CNBC and the WSJ moved toward such a move. That has also been supporting the greenback.

Gold has been extending its recovery, hitting $1,792 as returns on US Treasuries dropped, making the yieldless precious metal more attractive.

Cryptocurrencies: Bitcoin is trading below $46,000, off the highs, and Ethereum has stabilized around $3,150.

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

GBP/USD clings to 1.3500 amid marginal losses

GBP/USD alternates gains with losses around the 1.3500 neighbourhood on Tuesday. Indeed, Cable struggles to further extend its incipient recovery in a context of continuous instability in the Middle East and modest gains in the Greenback.

EUR/USD alternates gains with losses near 1.1540

EUR/USD navigates a tight range near 1.1550 in the latter part of Tuesday’s NA session. The US Dollar’s vacillating price action accompanies the pair while market participants gear up for the crucial US inflation data due on Wednesday.

Gold loses the grip below $4,400

Gold retreats from its earlier tops and briefly revisited the $4,350 region per troy ounce on Tuesday. The yellow metal’s modest retracement follows lacklustre gains in the US Dollar and declining US Treasury yields across the curve, all amid steady uncertainty from the geopolitical landscape.

Shiba Inu Price Forecast: SHIB extends sell-off despite surging futures Open Interest

Shiba Inu (SHIB) maintains a bearish outlook on Tuesday, as it edges lower at $0.00000450. This marks the seventh day the meme coin has sustained a sell-off, weighed down by a weak technical structure. Shiba Inu derivatives continue to gain momentum, with perpetual futures Open Interest (OI) rising to 11.08 trillion SHIB on Tuesday, from 10.46 trillion the day before.

The inflation narrative is still way more important than the employment story

Core bonds sold off yesterday with the belly of the curve slightly underperforming in the US while European curves showed more of a bear flattening. Daily changes on the US curve varied between +4.7 bps (2-yr) and +6.4 bps (7-yr).

9-3: Is the Federal Reserve’s vote tally Warsh's new forward guidance?

The rate did not move. Neither did the statement, and that’s the more interesting fact. Set the July 29 Federal Open Market Committee (FOMC) statement beside the one issued on June 17, and the two documents are identical apart from a single verb and a paragraph at the bottom naming three dissenters.