Patchy China data lift dollar, yields hold above 1.60%, Biden’s speech eyed

The market mood turned sour starting out the Fed week on Monday, as mixed Chinese activity data suggested an uneven recovery in the world’s second-largest economy. Sell-off ensued in China stocks, dragging the rest of Asian indices lower along with the US equity futures.

Amid risk-aversion, the haven demand for the US dollar returned and weighed on the riskier assets. The US Treasury yields hovered near yearly highs above 1.60%, supported by the massive US stimulus, which stoked inflation risks.

Markets shrugged-off Treasury Secretary Janet Yellen’s comments, citing that the US inflation risks remain subdued despite the stimulus. All eyes remain on President Joe Biden’s, as he expected to speak on implementing his COVID—19 rescue plan at 1745 GMT.

Biden is considering Gene Sperling for a role to oversee the implementation of his administration’s coronavirus relief plan, citing an administration official.

Across the FX board, EUR/USD looks south towards 1.1900 ahead a crucial week, with the Fed decision, German and Dutch elections in the spotlight. GBP/USD drops below 1.3900, as markets await UK PM Boris Johnson’s remarks on the vaccine rollout and £3bn investment on 4,000 new zero-emissions vehicles.

The aussie dollar is the weakest among the G10 currencies, as AUD/USD falls towards 0.7700 amid China jitters and RBA Governor Lowe’s comments. Lowe said that the central bank will maintain policy support until employment and inflation goals are met. Meanwhile, USD/JPY rises above 109.00, tracking the greenback higher.

Gold reversed gain while heading towards $1720 amid a broad US dollar comeback. Oil prices posted small gains, with WTI easing to the $66 mark.

Cryptocurrencies are on the backfoot, consolidating the advance over the weekend. Bitcoin corrects below $60,000 from new record highs. India proposed a cryptocurrency ban, penalizing miners and traders.

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