The market mood is positive, weighing on the dollar, ahead of US retail sales figures for May. Markets are eyeing mixed headlines about the Delta covid variant and uncertainty US infrastructure as the Fed decision looms large. Cryptocurrencies are clinging gains.
Risk-on: US 10-year Treasury yields have dropped under 1.50% once again as investors position themselves ahead of Tuesday’s release of US Retail Sales. Economists expect a drop in headline sales but an increase in core measures – relatively moderate changes after several turbulent months. Producer prices and industrial output also stand out on the economic calendar.
Markets are trading in limited ranges ahead of the Federal Reserve’s decision on Wednesday. The bank is set to leave its interest rates unchanged, release new forecasts and provide insights about a potential tapering down of its bond-buying scheme.
Infrastructure: Joe Manchin, the most conservative Democratic senator, said that further bipartisan negotiations are expected this week after limited progress so far. President Joe Biden continues his tour in Europe and progress is likely only afterward. Biden and his NATO counterparts offered a rebuke to China.
GBP/USD has bounced off 1.41 after reporting upbeat labor figures. Britain’s unemployment rate dropped to 4.7% in April while jobless claims tumbled by 92,600 in May. On the other hand, the government announced a four-week delay to the last stage of reopening, due to the spread of the Delta variant of COVID-19.
Virus: Both AstraZeneca and Pfizer reported a high efficacy rate of their vaccines in dealing with this Delta strain first identified in India. However, two doses are critical for providing significant protection.
Gold has been able to recover amid the upbeat mood, recapturing the $1,860 level. XAU/USD remains highly correlated with US yields.
EUR/USD is hovering above 1.21 as Europe continues benefiting from its rapid vaccination scheme and travel reopening.
Cryptocurrencies have been consolidating their gains, with Bitcoin holding onto $40,000 and Ethereum settling above $2,600. Legendary investor Paul Tudor Jones is in favor of diversifying portfolios with BTC.