Here is what you need to know on Tuesday, July 20:
Markets have been attempting to stabilize after diving on Monday as investors caught up with the rapid spread of the Delta covid variant. The safe-haven dollar is holding onto its gains, Bitcoin has tumbled under $30,000 and gold has recovered from a dip under $1,800.
Stock slump: The rapid spread of the Delta covid variant all over the world sent global shares tumbling, with the S&P suffering its worst day since May. Asian and European shares have followed, while S&P 500 futures are showing signs of stabilization.
Flight to safety: The US dollar surged across the board, despite a rush to American debt. Yields on 10-year Treasuries tumbled below 1.20%. An inverse correlation between returns and the greenback seems to be emerging. Yields have edged higher, allowing the greenback to taker a breather early on Tuesday.
The US dollar hit the highest in a year against the Aussie and the kiwi. These "risk" currencies are also exposed to an upswing in covid cases in Asia, with Malaysia and Indonesia standing out. Infections were detected also in the Olympic Village in Tokyo, yet the yen has benefited as a safe-haven currency, with USD/JPY hovering around 109.50.
GBP/USD dipped below the 1.3670 double-bottom on the UK's "Freedom Day" which was marred by a "pingdemic" – Hundreds of thousands of Brits were called to self-isolate after being exposed to people who tested positive. Activity in London remained mute despite the removal of most restrictions as cases remain high. Cable remains depressed at around 1.3660.
EUR/USD is trading below 1.18 and above the 15-week low of 1.1764 but remains pressured as infections rise in Europe. The common currency is used for funding. Investors await the European Central Bank's decision on Thursday.
Gold suffered a dip below $1,800 on Monday but recovered quickly, trading around $1,815 early on Tuesday. The risk-off mood exacerbated the drop in oil prices, sending WTI to around $66. Crude prices had suffered from the OPEC+ decision to increase output.
Bitcoin has tumbled below $30,000 and Ethereum slipped to $1,750 in a cryptocurrency sell-off which has wiped out some $100 billion off the value of digital assets. Dogecoin and Shiba have not been spared.
US Housing Starts and Building Permits are due out on Tuesday, yet investors will be watching covid headlines and perhaps developments related to infrastructure spending from Washington. US covid cases are also on the rise, especially in undervaccinated areas.
Delta Doom is set to storm America, the dollar could emerge as top dog
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds below 1.0750 ahead of key US data
EUR/USD trades in a tight range below 1.0750 in the European session on Friday. The US Dollar struggles to gather strength ahead of key PCE Price Index data, the Fed's preferred gauge of inflation, and helps the pair hold its ground.
USD/JPY stays firm above 156.00 after BoJ Governor Ueda's comments
USD/JPY stays firm above 156.00 after surging above this level on the Bank of Japan's decision to leave the policy settings unchanged. BoJ Governor said weak Yen was not impacting prices but added that they will watch FX developments closely.
Gold price oscillates in a range as the focus remains glued to the US PCE Price Index
Gold price struggles to attract any meaningful buyers amid the emergence of fresh USD buying. Bets that the Fed will keep rates higher for longer amid sticky inflation help revive the USD demand.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
US core PCE inflation set to signal firm price pressures as markets delay Federal Reserve rate cut bets
The core PCE Price Index, which excludes volatile food and energy prices, is seen as the more influential measure of inflation in terms of Fed positioning. The index is forecast to rise 0.3% on a monthly basis in March, matching February’s increase.