The Dow Jones, S&P 500 and Nasdaq Composite wobbled into this past week’s close, leaving risk trends on an uncertain note heading into the holiday-shortened week. Declining Treasury yields on the longer-dated spectrum helped push anti-fiat gold prices towards an upside breakout. Despite the risk aversion, the haven-linked US Dollar and Japanese Yen ended relatively flat for the week.
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Driving the sour mood likely has been rising coronavirus cases in certain countries: the US, China, Brazil, India and parts in Europe. Increasing infections from the world’s largest economy hit record levels, with the Houston Area declaring an emergency as Florida and Texas barred drinking at bars. Isolated lockdowns could risk derailing swift economic recovery prospects.
As markets are forward looking, these concerns could overshadow what may be more rosy data out of the US. All eyes turn to consumer confidence, ISM manufacturing PMI, initial jobless claims and Thursday’s highly-anticipated non-farm payrolls report. The minutes from June’s FOMC meeting could also reiterate that the outlook remains highly uncertain.
Meanwhile the Euro and British Pound will continue eying EU-UK Brexit negotiations. The two sides have until June 30 to decide on whether to extend the transition period. Another key fundamental theme to keep a close eye on include liquidity conditions and the Fed’s balance sheet. The latter has now shrunk over a weekly basis twice in a row.
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US DOLLAR WEEKLY PERFORMANCE AGAINST CURRENCIES AND GOLD