Risk rebounds, US dollar eases amid stimulus optimism, US ISM PMI eyed

The recovery in the risk sentiment remains the main underlying theme so far this Monday. Investors remain cheerful, starting out a fresh month, amid easing concerns over China’s economic growth and a regulatory crackdown.

Chinese stocks erased early losses and edged higher, leading a rebound in the Asian equities, as markets anticipate more monetary policy support amid disappointing Manufacturing PMI from the world’s second-largest economy.

Meanwhile, progress on a US infrastructure spending plan aided sentiment. US Senator Sinema introduced a roughly $1 trillion bipartisan infrastructure bill on the Senate floor, in a step toward passage of the infrastructure bill.

Considering the stimulus optimism, the US dollar eases across the board, looking to reverse its recovery from the dovish Fed-led slide. The US infrastructure spending news drives the S&P 500 futures higher, although fails to impress AUD/USD, as it remains weighed down by the covid lockdowns in Australia.

The US Treasury yields reverse previous gains amid a flight to safety in the bonds, shrugging off the progress on US President Joe Biden’s bipartisan $1.2 trillion infrastructure deal. The US Senate remains upbeat on prospects for a $1 trillion bipartisan infrastructure bill, which cleared an important procedural hurdle by a vote of 67-32 on Wednesday.

USD/JPY is holding the lower ground around 109.65, undermined by the weakness in the 10-year US Treasury yields. EUR/USD is crawling back towards 1.1900 ahead of the Euro area final Manufacturing PMIs.

GBP/USD is rising back above 1.3900 amid the US dollar’s retreat and the UK’s vaccine optimism, as covid cases in the Kingdom continue to drop. Easing Brexit concerns also help the pound, as the focus shifts towards the Bank of England (BOE) monetary policy decision this Thursday.

Gold is licking its wounds around $1810, as the risk recovery offsets the retreat in the yields and the dollar. Investors look forward to US ISM Manufacturing PMI for fresh trading impetus.

Bitcoin has pulled back from above $40,000 amid sluggish trading seen across the crypto board.

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