Dollar rises with yields, Delta fears grow, Canadian jobs, central bankers eyed

The dollar has resumed its gains, this time as yields reverse course and rise. Concerns about the Delta covid variant weigh on some markets. Oil, gold and Bitcoin trade off the highs. Canada’s jobs report and speeches from the ECB’s Lagarde and the BOE’s Bailey are eyed.

US bond yields have reversed course and risen above 1.33% after several days of fast declines that perplexed traders. The increase supports the greenback across the board, including against the euro, which stood out with gains against the greenback on Thursday.

EUR/USD is trading under 1.1850 after advancing to higher ground amid the European Central Bank’s announcement of a strategic review. The Frankfurt-based institution now targets a symmetric 2% target rather than a ceiling. Investors had priced in that dovish change and seemed to buy the euro in response to a lack of other substantial moves.

The ECB continues targeting headline inflation rather than core prices. President Christine Lagarde will speak again on Friday.

See ECB Strategy Change Analysis: Lagarde lags behind dovish Fed, EUR/USD has room to rise

GBP/USD is trading below 1.38 as COVID-19 cases continue rising, topping 32,000 in Thursday’s report. The rapid spread of the Delta variant threatens to derail Britain’s report due on July 19. The EU and the UK are at loggerheads over a new Brexit issue – Britain’s divorce bill. A difference of around €6 billion is still to be settled.

Sterling is also pressured by downbeat Gross Domestic Product figures for May, which showed an increase of only 0.8%, roughly half the early expectations. Bank of England Andrew Bailey is scheduled to speak later in the day and may shed light on the BOE’s plans.

The spread of coronavirus has also been weighing on Asian stocks, as Delta hits countries such as Indonesia and Malaysia hard. Japan announced that the Olympic Games will be held without spectators.

China reported that inflation has slowed down to 1.1% YoY in June, weaker than expected. Producer prices rose by 8.8% last month, an elevated level but below the highs. The figures add to a picture of a cooldown.

US stock markets declined on Thursday amid the jitters in bond markets and worries about the spread of Delta in America. Despite having an abundance of vaccine doses, many in the world’s largest economy have yet to get the jab.

Canada releases its jobs report for June, and after two months of sharp declines, a substantial increase of over 170,000 positions is expected. USD/CAD is trading at around 1.25, chopping around in response to fluctuating petrol prices. WTI Crude Oil is trading around $73, off the lows it hit in response to speculation that the UAE would ramp up output.

Bitcoin is hovering around $33,000, extending its gradual decline. Ethereum is holding above $2,100.

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