- US dollar on the defensive at nine-month highs
- AUDUSD claws back some of the losses accrued last week
- NZDUSD bounces back but is still under pressure
- Oil prices edge higher after biggest weekly loss in nine months
- Bitcoin rally gathers pace
The US dollar started the week on the back-foot, edging lower early Monday morning. However, it remains at its highest level in more than nine months, as its sentiments in recent weeks have been bolstered by tapering talks.
Additionally, the greenback has benefited from traders shunning riskier currencies in favor of safe-havens in response to growing concerns about the Delta variant causing havoc worldwide.
AUDUSD bounce back
The losses experienced earlier in the day helped offer some support on the AUDUSD, which clawed back some of the losses accrued the past week. The pair has since bounced back but remains subdued near multi-month lows of 0.7160.
AUDUSD turned bearish after tanking and closing below the 0.7300 level last week. With all the major indicators signaling that the pair is in oversold territory, a bounce-back could be in the cards as traders take profit.
On the flip side, failure to bounce back and find support above the 0.7200 level could leave AUDUSD susceptible to further losses, seeing it plunge to the 0.7000 level.
As is the case with other commodity currencies, Australian dollar sentiments have been weighed heavily by the persistent concerns about COVID-19 impact on economic recovery. A number of states in the country are already under lockdown, consequently curtailing economic activities.
The New Zealand dollar is another riskier currency under immense pressure as traders shift their attention to safe-havens. The NZDUSD pair has since plunged to nine-month lows, weighed heavily by dovish comments from the Reserve Bank of New Zealand.
While the pair did start the week on the front foot, it faces an uphill task to rising and find support above the 0.6900 level given the strength of the bearish momentum.
In response to the increasing Covid-19 cases in the Asia Pacific, the increasing greenback demand could continue to weigh heavily on NZDUSD’s bounce back. Prime Minister Jacinta Arden’s move to impose a one-week lockdown also continues to weigh heavily on the NZDUSD. In addition, delays on rate hikes should continue to curtail bounce backs.
Oil prices rise amid bargain hunting
Oil prices rose Monday morning after a huge sell-off last week to three-month lows in the commodities markets. The bounce-back came as traders hunted for bargains. A softer US dollar also helped offer support for a bounce-back in prices. Brent crude was up 1.8% to $66.30 as US West Texas oil rose 1.7% to about $63.21 a barrel.
Both benchmarks are trying to rise after posting the biggest loss in more than nine months last week. Brent shed 8% as WTI fell by 9%. The sell-off came amid growing concerns about fuel demand amid the spread of the delta variant that is triggering lockdowns. Amid the bounce back, the general outlook in the oil markets is bearish.
US indices bounce back
US stocks bounced on Friday, sending major indices higher. However, the indices finished the week in the red, following mid-week losses as fears over escalating COVID-19 situation sent shockwaves. The S&P 500 was up 0.81% on Friday as the Dow Jones Industrial Average rose 0.65% and NASDAQ 1.19%.
Amid the bounce back, uncertainty continues to grip the equity market amid the COVID-19 situation. Additionally, the lingering uncertainty over when the Federal Reserve will start tapering its massive stimulus buying affects sentiments.
BTCUSD takes out $50,000
The upward momentum is gathering pace in the cryptocurrency marketplace, with BTCUSD taking out the $50,000 psychological level over the weekend. The rally follows an initial pullback from the $48,000 resistance level back to the $44,000 handle.
With the bullish momentum gathering pace, bulls could make a run for all-time highs of $64,000. The upward momentum is supported by positive rhetoric, with the latest is from Coinbase, which said it would buy $500 million in crypto on its balance sheet.
The exchange also plans to allocate 10% of its profits into a crypto assets portfolio. PayPal has also confirmed it will allow customers in the US to buy, hold and sell Bitcoin and Ethereum, among other altcoins.