Close: London Session | Forex, Metals, Oil, Agriculture July 19, 2021

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Currencies

Pay close attention to the US dollar, as a strengthening US dollar also tends to work against the stock market as well. A 10.5% dollar bond due 2024 declined 6 cents to 61.4 cents on the dollar, lifting yields to 33%, according to Tradeweb. The dollar rides high, with the Scandis and dollar-bloc currencies off leading the move with losses of mostly 0.3%-0.7%, with the Canadian dollar being tagged for more than 1%. I’d also expect to see the dollar rising as global investors generally want to hold dollars when things are looking their worst.
Since the start of July, 10-year yields have declined around 18bps yet the dollar index has been moving higher (SPTL). Investors have flown to the US Dollar as a safe-haven asset that added more fuel to the burning bearish trend. Pixabay The dollar is losing its reaction function to falling Treasury yields, which suggests that it is attracting safe-haven flows. The WSJ Dollar Index climbed 0.3% to the highest level since March earlier in the day, before flattening.
The dollar is up from its recent lows but the rally so far looks pretty anemic. But the yellow metal’s gains were capped by a stronger U.S. dollar.

Metals

Digital goldUsers have taken to purchasing digital gold from Paytm Gold in a big way going by the number of investors who had used this service. The Gold Analyst offers quality technical and fundamental analysis of the price of gold to help educate readers in their investment decisions. Jason Sen Follow Gold Spot broke first support at 1825/23 to bottom exactly at strong support at 1813/10, but there was no bounce from here. Gold Spot broke first support at 1825/23 to bottom exactly at strong support at 1813/10, but there was no bounce from here.
In physical trading, gold dealers in Indian offered discounts of as much as $5 per ounce last week. Gold prices are trading down by 0.4% at Rs 47,885 per 10 grams. However, a break from that resistance could pave the way for gold to climb through $1,900 an ounce, he predicted. Gold prices remained weak today in Indian markets amid lackluster global cues. Spot gold is currently trading at $1,804.10 per ounce as of 0730 GMT.
On the technical front, Ilya Spivak of DailyFX noted that gold prices produced an Evening Star candlestick pattern that indicates a potential downward trend.

Oil

OPEC Plus agreed to raise oil production that on the face of it, would be barely enough oil to keep up with demand. That is a powerful reminder that there is plenty of spare crude oil capacity out there to meet rising demand, especially in the US and parts of Europe (OIL). After OPEC+ failed to reach an agreement in its scheduled meeting earlier this month, oil prices dipped initially but recovered, as if the market couldn’t envision full-blown chaos. The grand OPEC+ bargain, to boost production, raise baselines, and make nice again, sets the stage for slightly lower oil prices.
Traders in recent days have unwound some wagers that oil demand will continue to climb as more consumers get vaccinated and resume normal travel patterns. Still, this is not a significant adverse outcome as it increases the probability of an orderly return to normal production levels for heavy-weight oil producers. Some traders also remain wary of more travel shutdowns, which would have an outsize impact on oil prices.
While the new OPEC+ agreement does limit the likelihood of some extremely bullish Q4 oil price scenarios playing out, it also reduces the downside risk of OPEC+ falling apart.
The pace of easing matches the Organization of the Petroleum Exporting Countries’ forecast, which sees world oil demand recovering to pre-pandemic levels by year-end 2022. less Oil prices extended losses, albeit at a slower pace, on Friday, July 16, with Brent dipping 0.16% to $ 72.64/bbl, and WTI closing 0.13% lower at $71.09/bbl.

United States

In the past, investors cheered each time economic data disappointed, seeing it as a catalyst for additional dovish fiscal policy from the Fed which would include ongoing stimulus. Although FED Chair, Jerome Powell was measured in his remarks on inflation, this did little to calm investors’ jitters as the decline in stocks was sharp. The momentum continued this week, when small caps plunged 3.9%, while the Nasdaq 100 Index fell 0.2% and tech stocks in the S&P 500 added 0.4%.
less Investing.com Follow The NASDAQ Composite fell 0.8% on Friday, extending the tech-heavy index’s weekly loss to almost 2%. Nasdaq Futures are trading down by 12 points (down 0.1%) while Dow Futures are trading down by 133 points (down 0.4%). less Some believe the Fed QE will get spent causing inflation. Yellen, former chair at the Fed, evaded a question from a television interviewer last week about reappointing Powell but said she thought the Fed has done a good job.
The recent surge in “Meme” stocks like AMC and Gamestop as the “retail trader sticks it to Wall Street” is not new (AMC, GME). The Dow futures are off more, while the Nasdaq futures are down a little less. US stock futures are trading lower today, indicating a negative opening for Wall Street.

China

The shaky finances of coal plants and their banks also muddy the water for Beijing on tough, quick action against the fuel. While it will be challenging for Beijing to achieve its goal, China’s plan to become a green superpower will have ripple effects around the world.

Europe

However, the ECB remains committed to creating a supportive environment to aid the recovery of the economic zone and warns against tightening too soon. Source: Tradingeconomics The recent changes to the ECB’s inflation target of 2%, with overshoots allowed, further entrenches the ultra-dovish nature of the ECB. The common currency hovers around critical levels (1.18 for the EUR/USD and 130 for the EUR/JPY) while we wait for the European Central Bank (ECB) decision.
Meanwhile, trade from Dublin Port to continental Europe has increased since Brexit while business with ports in Britain has slumped. The range may extend until the ECB meeting later in the trading week. His feature articles have been published on: FXstreet.com, Thestreet.com, Action forex, Forex TV, Istockanalyst, ForexFactory, Fxtraders.eu, Insidefutures.com, etc. Both Prime Minister Boris Johnson and the British Treasury chief are in self-isolation after being exposed to Covid-19.

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