Dollar recoups from NFP blow, markets upbeat amid a quiet start to a big week

The market mood is upbeat starting out a fresh week this Monday, with the key Asian indices rallying 2%, as investors push back the Fed’s tapering expectations amid a big miss on the US Nonfarm Payrolls on Friday. The US economy added 235K jobs in August vs. an increase of 750K expected.

Further, growing concerns over the Chinese economic slowdown have raised hopes for more stimulus from the country’s authorities, which has added to the market optimism. However, holiday-thinned conditions combined with the Delta covid variant concerns keep investors slightly on the edge. The US and Canada are on holiday, in observance of Labor Day.

The S&P 500 futures are alternating between gains and losses around 4,535 while the US 10-year Treasury yields consolidate Friday’s sharp rally above 1.30%. The US dollar is staging an impressive bounce, taking cues from the recovery in the Treasury yields.

Within the G10 fx space, the Antipodeans are the biggest losers so far. AUD/UD is dropping back towards 0.7400 after the relentless rise in the covid cases in New South Wales, falling oil and iron ore prices.

The kiwi is strongly offered below 0.7150 while USD/CAD jumps to 1.2545. WTI sheds 1.50% to test the $68 mark after Saudi Arabia slashed its crude price to Asia over the weekend. The weakness in oil price is weighing on the resource-linked Loonie, as investors await Wednesday’s Bank of Canada (BOC) rate decision for fresh policy guidance.

EUR/USD is retreating towards 1.1850 amid a broad US dollar bounce, although the downside appears limited amid tapering expectations, as ECB looms this Thursday. In the meantime, the Eurozone Sentix Investor Confidence will be eyed.

GBP/USD is trading around 1.3850, losing ground amid resurfacing Brexit concerns. BBC News reported, “business leaders, trade unions and academics have urged the UK and the EU to deliver ‘balanced, bespoke and reasonable’ solutions to tensions caused by the post-Brexit trade arrangements for Northern Ireland.” Meanwhile, UK PM Boris Johnson is expected to push through a rise in national insurance to fund social care.

Gold price is holding the lower ground below $1830, easing slightly from two-month highs of $1834, as bulls catch a breather before initiating the next upswing towards $1850.

Cryptocurrencies remain in a consolidative mode after Bitcoin enjoyed a good weekend above $51,000. Ethereum is preparing for a new lifetime-high.

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