The greenback holds its ground early Monday after outperforming its rivals last week. The US Dollar Index (DXY) is moving sideways above 96.00 as investors await the Federal Reserve Bank of Chicago’s National Activity Index and October Existing Home Sales data. The risk mood seems to be improving at the start of the week but market participants remain worried about the possible imposition of coronavirus-related lockdowns in Europe.
Hawkish comments from Fed officials provided a boost to the dollar ahead of the weekend. Federal Reserve Vice Chair Richard Clarida said that it may be appropriate in December to discuss accelerating the pace of asset purchase reductions. On a similar note, Fed Governor Christopher Waller argued that the Fed could start tapering by $30 billion from January and open the door for a rate hike as early as April.
The Shanghai Composite Index is up more than 0.5% despite some cautious remarks on the economic outlook. Liu Shijin, an advisor to the People’s Bank of China (PBOC), said on Monday that the Chinese economy could enter a period of “quasi-stagflation” with relatively slow growth and excessively high producer-price inflation. Meanwhile, US stock index futures are posting modest gains, suggesting that Wall Street’s main indexes could open on a firm footing. Meanwhile, the 10-year US Treasury bond yield is holding above 1.5% following Friday’s decline.
EUR/USD continues to have a difficult time staging a convincing rebound and trades below 1.1300. Later in the day, the European Commission will release the preliminary Consumer Confidence data for November.
GBP/USD fell sharply on Friday and erased the majority of its weekly gains. The pair stays relatively quiet around mid-1.3400s on Monday but the lack of progress in negotiations over Brexit’s Northern Ireland protocol is not allowing the British pound to find demand.
Gold fell toward the lower-end of its weekly range on Friday and broke below $1,850 during the Asian trading hours on Monday. XAU/USD is likely to react to the fluctuations in the US Treasury bond yields in the absence of high-tier data releases.
USD/JPY is trading in a very narrow band above 114.00 on Monday. Earlier in the day, the Japanese government has announced on Friday that the Cabinet approved a new fiscal stimulus package with spending worth JPY55.7 trillion.
AUD/USD stays afloat in the positive territory around 0.7250 and NZD/USD extends sideways grind above 0.7000. Risk flows seem to be helping the aussie and the kiwi stay resilient against the dollar.
USD/CAD consolidates last week’s gains above 1.2600 as the oil selloff seem to be taking a break on Monday. After losing more than 4% on Friday, the barrel of West Texas Intermediate (WTI) is trading flat a little below $76.00 in the early European session.
Cryptocurrencies: Bitcoin climbed to $60,000 on Saturday but failed to gather enough bullish momentum to advance beyond that level. As of writing, BTC/USD was down more than 2% at $57,300. Following a rebound that lasted for two days, Ethereum turned south on Sunday and continues to push lower toward $4,000 on Monday.