At the beginning of the week, the market lacked fresh catalysts, and speculative interest decided to continue selling the dollar. EUR/USD hit 1.1751, while GBP/USD was trading at 1.2900. Both pairs settled a few pips below the highs mentioned.
Commodity-related currencies advanced at familiar levels relative to their US counterparts as weak stock tone limited their gains. Wall Street, however, has managed to post some gains, with technology stocks and Nasdaq leading the way.
The safe-haven assets also won. USD/JPY has been flirting from 105.00 and may continue to fall, while gold soared to a record high of $ 1,945.60 a troy ounce, ending the day around 1,942.
The dollar sell-off is close to exhaustion, which means the market could correct in the next sessions. This will not mean a trend change.
Market participants ignored macroeconomic data. The financial world has been driven by negative sentiment against the US dollar, amid tensions between the US and China and the continuing rise in coronavirus cases in the country. The market expects the country’s GDP for the second quarter to be -34%, which was a record historical drop.
Powerful rallies in the euro and gold remain the dominant theme today, as traders appear to be focused on deteriorating US-China relations and the second wave of coronavirus infections in the US and Asia. The Swiss franc falls sharply, mainly under pressure from the selling of the euro, while the yen is solid and stable.
Events suggest that these moves are not driven by widespread risk aversion, which is also reflected in sluggishness in equity markets.
The dollar remains under pressure, following the Swiss franc as the second weakest. Crude oil prices remained within familiar levels before a clearer picture. WTI remains above $41.00 per barrel.
The macroeconomic calendar on Tuesday will remain meager, and its expectations are growing ahead of the US Federal Reserve meeting next Wednesday.
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