Dollar wins amid Delta covid woes, stimulus optimism, all eyes on US inflation

Cautious optimism remains the underlying theme amid the passage of the US $1 trillion infrastructure bill and Delta covid variant flareups in the US and Asia-pac regions. Meanwhile, investors also turn cautious ahead of the all-important US Consumer Price Index (CPI) data due for release on Wednesday at 1230 GMT.

The Asian indices trade mixed while the S&P 500 futures post small losses. US Treasury yields keep pushing higher, with the 10-year rates hitting the highest level since early July. The US dollar consolidates the upside on expectations of earlier than previously thought Fed’s tapering, in light of stronger employment data.

Hawkish Fedspeak also continues to underpin the dollar’s demand. Chicago Fed President Charles Evans said that he expects substantial further progress later in the year on asset tapering.

Later this Wednesday, Atlanta Fed President Raphael Bostic is due to speak speaking on “The Federal Reserve’s Role in Making This an Economy That Works for Everyone” at 1430 GMT. Kansas City Fed President Esther George will speak on “A View from the Federal Reserve Bank of Kansas City “at 1600 GMT.

Gold is making another recovery attempt towards $1750. WTI is hovering around $68, reversing a part of Tuesday’s rebound, despite a drawdown in the API crude stockpiles.

Within the G10 currencies basked, subdued trading ranges are seen, as the US dollar is holding steady after the recent upsurge.

AUD/USD is the weakest and remains pressured below 0.7350, as Melbourne extended covid lockdown by another seven days. New South Wales (NSW) continues to report over 300 new cases daily basis.

EUR/USD is trading listlessly above 1.1700, fresh five-month lows, in response to strengthening yields and the dollar. Meanwhile, the German ZEW Survey disappointed on Tuesday.

GBP/USD remains pressured towards 1.3800 amid impending Brexit concerns, which outweigh the vaccine optimism within the country. The UK government could likely extend the emergency powers for trucks heading into France in a move to use Brexit rights, “signaling the government expects further cross-Channel disruption,” The Guardian reports.

Cryptocurrencies remain rangebound at higher levels, with Bitcoin languishing between $45K-$46K.

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