Forex Today: Risk-on and dollar strength to start the week

FXStreet Team FXStreet

What you need to know on Monday, March 8:

The American dollar extended its gains heading into the weekly close, following upbeat employment-related data and soaring government bond yields. The US created 379K new jobs in February, more than doubling the market’s expectations, while the unemployment rate shrank to 6.2%. Stocks rallied on the news, but also government bond yields. The yield on the benchmark 10-year Treasury note hit 1.626%, a fresh one-year high, finishing the week at 1.577%.

The EUR was among the worst performers, falling to 1.1892 against the greenback and settling nearby. GBP/USD and AUD/USD also fell, but closed the day off weekly lows, helped by oil and equities’ advances. The USD/CAD pair edged lower and closed the week in the red, amid higher oil prices, with WTI ending the week trading above $ 66.00 a barrel.

The USD/JPY pair soared to 108.64, a fresh 2021 high, retaining its weekly gains ahead of the close.

Gold managed to recover some ground, settling at $1,700 a troy ounce.

On Saturday, the US Senate passed the $1.9 trillion stimulus package, although some changes were introduced regarding the increase of the minimum wage to $15 per hour and the number of people who will qualify for a $1,400 stimulus payment. The final vote was 50-49, with all Democrats voting in favor of the bill and all Republicans voting against it. The bill, called American Rescue Plan Act, now moved back to the House, where it will be voted on Tuesday.

US Treasury Secretary Janet Yellen welcomed the news and tweeted: “With the economy down 9.5 million jobs since February 2020, it could be 2 years before the labor market simply reaches its pre-pandemic level. These high rates of job loss threaten the wellbeing of workers & their families.” She added that once it becomes law, she’s confident that “Americans will be met by a strong economy when we make it to the other side of the pandemic.”

Chinese trade figures released over the weekend showed the Trade Balance surplus in dollar terms resulted in $103.25 billion, much better than anticipated. Exports rose 50.1% while imports were up by 14.5%. The news may support risk-on sentiment at the weekly opening.

The UK will start reopening this Monday, according to the plan outlined by Prime Minister Boris Johnson.

Risk-sentiment may remain on at the weekly opening.

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EUR/USD recedes to daily lows near 1.1850

EUR/USD keeps its bearish momentum well in place, slipping back to the area of 1.1850 to hit daily lows on Monday. The pair’s continuation of the leg lower comes amid decent gains in the US Dollar in a context of scarce volatility and thin trade conditions due to the inactivity in the US markets.

GBP/USD resumes the downtrend, back to the low-1.3600s

GBP/USD rapidly leaves behind Friday’s decent advance, refocusing on the downside and retreating to the 1.3630 region at the beginning of the week. In the meantime, the British Pound is expected to remain under the microscope ahead of the release of the key UK labour market report on Tuesday.

Gold looks inconclusive around $5,000

Gold partially fades Friday’s strong recovery, orbiting around the key $5,000 region per troy ounce in a context of humble gains in the Greenback on Monday. Additing to the vacillating mood, trade conditions remain thin amid the observance of the Presidents Day holiday in the US.

Bitcoin consolidates as on-chain data show mixed signals

Bitcoin price has consolidated between $65,700 and $72,000 over the past nine days, with no clear directional bias. US-listed spot ETFs recorded a $359.91 million weekly outflow, marking the fourth consecutive week of withdrawals.

The week ahead: Key inflation readings and why the AI trade could be overdone

It is likely to be a quiet start to the week, with US markets closed on Monday for Presidents Day. European markets are higher across the board and gold is clinging to the $5,000 level after the tamer than expected CPI report in the US reduced haven flows to precious metals.

XRP steadies in narrow range as fund inflows, futures interest rise

Ripple is trading in a narrow range between $1.45 (immediate support) and $1.50 (resistance) at the time of writing on Monday. The remittance token extended its recovery last week, peaking at $1.67 on Sunday from the weekly open at $1.43.