Forex Today: Dollar remains in demand amid covid concerns, ahead of US infrastructure vote

Here is what you need to know on Tuesday, August 10:

The Asian stocks tracked the sluggish performance on Wall Street overnight, undermined by the prospects of stimulus withdrawal and Delta covid variant resurgence in the region.

The market mood remains sour heading into the session ahead while the US dollar holds steady at three-week highs, helped by the hawkish Fedspeak and expectations of an earlier Fed’s tapering after the US NFP blowout. Escalating Delta covid concerns also buoy the sentiment around the safe-haven dollar, weighing negatively on the US yields.

The greenback also holds the higher ground ahead of the US Senate vote on President Joe Biden $1 trillion infrastructure bill, scheduled at 1500 GMT on Tuesday. US Senate Majority Leader Chuck Schumer said, “We have come to an agreement" for final passage of the infrastructure bill.” 

Meanwhile, gold is licking its wounds while attempting a tepid rebound around $1735 from five-month lows of $1688. WTI is on a steady recovery from three-week lows, recapturing $67 ahead of the US weekly crude supplies report.

Across the FX board, most majors are wavering in a narrow range amid a broadly steady US dollar, although the kiwi appears the main laggard.

Meanwhile, AUD/USD also remains on the back foot, closing in on the 2021 lows, amid a drop in business confidence and the relentless spread of covid cases in Australia. The most populous Australian state of New South Wales (NSW) recorded over 350 new infections and has emerged as a new epicenter.

GBP/USD is seeing some fresh demand near 1.3850, although remains undermined by the renewed Brexit jitters, with migrant crisis – the new issue. Former Brexit Party leader Nigel Farage slammed France and the EU for failing to “lift a finger” to prevent the dangerous cross-channel migrant crisis.

EUR/USD is hovering near four-month lows of 1.1731 amid a drop in the Eurozone Sentix Investors’ Confidence, hawkish Fed expectations and ahead of the German ZEW Survey.

Cryptocurrencies are seeing a bit of a pullback, with Bitcoin back below $46,000. Senate rejected crypto amendment as bipartisan bill proceeds to a final vote without further changes.