Forex Today: Dollar licks its NFP-inflicted wounds, covid headlines and OPEC+ disagreement eyed

Yohay Elam FXStreet

Here is what you need to know on Monday, July 5:

The dollar has kicked off the week with an attempt to gain ground after falling in the aftermath of Friday's jobs report. Weak Chinese Services PMI and covid worries are weighing on sentiment. OPEC+ has yet to reach a deal, Bitcoin is off the weekend highs and low volume is expected later due to a US holiday.

Nonfarm Payrolls showed an increase of 850,000 US jobs in June, beating expectations for a change, yet accompanied with a moderate increase of 3.6% in wages and without substantial revisions. America is still some 6.8 million people short of its pre-pandemic workforce. For markets, the mix of robust growth and fewer inflationary pressures is a "Goldilocks" scenario.

US Nonfarm Payrolls: June pleases everyone

Apart from the shortcoming within the details of the report, the publication served as a trigger to reverse some of the greenback's gains earlier in the week. On Monday, US traders are off due to the long Independence Day holiday and the dollar is marginally off its lows.

NFP Analysis: Buy the dollar dip? Healthy jobs growth to keep Fed on tapering track

Another reason for the greenback to recover stems from safe-haven flows. The Chinese Caixin Services PMI missed estimates by 50.3 points, reflecting mediocre growth in the sector.

The rapid spread of the Delta variant of coronavirus is another reason for concern. The UK recorded over 24,000 daily cases and the strain is also moving through Asia and Europe. Concerns about contagion and somewhat weaker vaccine resistance also weigh on sentiment.

WTI Crude Oil is trading around $75, holding onto the highs as OPEC+ members have been failing to reach an agreement on raising crude output. Negotiations continue.

Cryptocurrencies: Bitcoin is trading below $35,000 after topping that level over the weekend. A crackdown on Binance seems to be one of the downside triggers. Ethereum is changing hands at around $2,300.

See How to trade the second half of the year

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.

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Crypto Today: Bitcoin holds the 50-day EMA as Ethereum and XRP face structural resistance

Bitcoin gradually ticks up on Friday, trading above $81,000. The Crypto King has recently defended structural support near $80,000, reinforcing the prevailing bullish outlook. Ethereum similarly edges higher above $2,400, while Ripple trades above $1.32 after testing support around $1.30.

The French bond panic is overdone. Here's what the market is misreading

France's 10-year government bond yield has climbed above 5%, reigniting fears of a sovereign debt crisis in the Eurozone. With public debt exceeding €3.5 trillion, persistent budget deficits and a fragmented political landscape, investors are increasingly questioning the French government's ability to stabilize its finances.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.