Evergrande, infrastructure and inflation worries return ahead of OPEC+

Markets have kicked off the week on the back foot after Friday’s rally, while the dollar remains stable. New worries about Evergrande, uncertainty about US infrastructure, and covid headlines are in the limelight.

Congress: Voting on the bipartisan infrastructure bill was suspended amid a lack of support from the left-wing of the Democratic Party. Progressives want guarantees that the larger $3.5 trillion bills would receive backing from centrists. Uncertainty is weighing on sentiment.

Evergrande: The Chinese construction behemoth is in the spotlight again after trading was suspended in shares. The fate of a $260 million debt payment is in the air, yet reports of sales of some of its assets and an orderly restructuring provide hope. Chinese markets are closed for a holiday and resume activity only on Friday.

Concerns that global growth would be delayed due to inflation and supply-chain issues continue weighing on sentiment.

Coronavirus: One of the reasons for Friday’s rally was Merck’s announcement of developing an antiviral cure to the disease. Merck’s pills still require regulatory approval. Vaccines have pushed global cases lower, yet the Delta variant is still wreaking havoc, contributing to supply-chain disruptions.

EUR/USD has stabilized around 1.16 ahead of the release of Sentix Investors Confidence. GBP/USD is clinging to its recovery from Friday when it surged to 1.3550. Britain continues grappling with ongoing petrol shortages. USD/JPY is trading around 111 as Fumio Kishida becomes Japan’s Prime Minister.

OPEC+ members are meeting to discuss oil output cuts amid higher fuel prices, especially those of natural gas. No substantial changes are expected. WTI Crude Oil is trading around $75, close to the highs.

Nonfarm Payrolls stand out as the main event of the week and could seal the deal on the Federal Reserve’s expected tapering announcement. Fed Chair Jerome Powell’s signal of such a reduction in bond-buys is the main reason for the dollar’s rally early last week. Fed officials James Bullard and Kenneth Montgomery are set to speak later in the day.

Cryptocurrencies: Bitcoin is holding onto gains recorded on Friday when it shot from $44,000 to $48,000. Speculation about regulation is in play. Ethereum is changing hands near $3,330, above last week’s levels, and Ada is around $2.20.

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