Stocks Erase Monday’s Big Losses

When everything seems to be going against you, remember that the airplane takes off against the wind, not with it. – Henry Ford

 

 

HEADLINES

 

 

• U.S. dollar advances to three-month high in safety move
• USD/CAD drops toward 1.2700 amid modest oil rebound
• Oil rebounds as market seizes on discounted prices
• Dow rebounds more than 500 points, recovering most of Monday’s losses
• Netflix current-quarter forecast misses estimates, shares fall
• Meme Tokens Set for Third Straight Monthly Loss as Retail Traders Flee Dogecoin Copycats
• ECB to Pave the Way for a Weaker Euro: Validus Risk Management
• RBA tapering to be delayed to November – Goldman Sachs

 

 

FOREX

 

 

U.S. dollar advances to three-month high in safety move

 

The U.S. dollar climbed to a three-month peak on Tuesday in a flight-to-safety bid, as investors remained anxious about a fast-spreading coronavirus variant that could throttle global growth.

 

USD/CAD drops toward 1.2700 amid modest oil rebound

 

The USD/CAD pair extended its rally and advanced beyond 1.2800 for the first time in five months. With risk flows starting to dominate the financial markets in the second half of the day, however, the pair reversed its direction and was last seen losing 0.25% at 1.2715.

 

 

COMMODITIES

 

 

Oil rebounds as market seizes on discounted prices

 

Crude oil futures rebounded on Tuesday as market participants vied to take advantage of oil's two-month low touched in the previous session.

 

Gold price fails to capitalize on falling bond yields

 

Gold prices remained in a slump on Tuesday despite the continued decline in US treasury yields amid rising concerns over the covid-19 delta variant.

Benchmark 10-year treasury yields touched more than a five-month low Tuesday, reducing the opportunity cost of holding non-interest bearing gold. The precious metal has jumped about 4.3% from more than a two-month low hit last month, but is down about 4% since the start of the year.

 

 

STOCKS

 

 

Dow rebounds more than 500 points, recovering most of Monday’s losses

 

Major averages rebounded Tuesday as investors stepped in to buy the dip from the Dow Jones Industrial Average’s worst day in eight months.

The comeback rally gained steam steadily through the session as a bounce in Treasury yields soothed some concerns that a Covid resurgence would slow down the economic recovery. As the 10-year yield climbed back above 1.20%, the run-in stocks increased. The Dow Jones Industrial Average rose 550 points to 34,512.39, or 1.6%, following its 725 point-decline Monday.

 

Netflix current-quarter forecast misses estimates, shares fall

 

Netflix Inc forecast third-quarter paid subscriber additions below Wall Street estimates on Tuesday, as the streaming giant faces intense competition from deep-pocketed players and the stay-at-home boost wanes.

 

 

CRYPTO

 

 

$40B wiped off crypto market as bitcoin drops below $30K again

 

About $40 billion has been wiped off the cryptocurrency market in the past 24 hours as bitcoin slumped below $30,000 per coin again, pressuring the price of other cryptos as well. It’s the first time the price of bitcoin has fallen below $30,000 per coin since about a month ago. Some investors view that price as a key support level for the digital coin.

 

Meme Tokens Set for Third Straight Monthly Loss as Retail Traders Flee Dogecoin Copycats

 

A recent shakeout in meme tokens, a sector best known by the Shiba Inu-themed dogecoin (DOGE), indicates that retail investors are exiting their positions in cryptocurrencies as recent market sell-offs have spooked many crypto newcomers.

 

 

ANALYSIS

 

 

ECB to Pave the Way for a Weaker Euro: Validus Risk Management

 

"Continued dovishness from the ECB will pave the way for increased policy divergence in the near-term and weigh on the Euro."

With the ECB now revising its inflation target, there is further latitude for the central bank to ramp up its pandemic related asset purchases to stimulate activity in a region that has struggled with low inflation levels over the years.

This could potentially result in continued accommodative policy measures beyond the set expiry of the Pandemic Emergency Purchase Program (PEPP) in the spring of 2022. In that event, policy divergence with the other central banks will continue to drift apart and lead to further declines in the Euro.

 

RBA tapering to be delayed to November – Goldman Sachs

 

“Looking forward, despite signalling a taper in QE purchases beyond September at July's meeting, we note recent press reports suggest Governor Lowe may reverse this decision if lockdowns in Sydney and Melbourne are prolonged.“

“Combined with ongoing risks around the spread of the delta variant to other regions of Australia - we note South Australia just entered a 7-day lockdown.”

“We now expect the RBA to reverse its taper decision at its August meeting. Instead, we expect the RBA to continue QE bond purchases at a pace of A$5bn/week once the current tranche ends in September, before ultimately starting to taper in November 2021."

 

 

CHART

 

 

US dollar / Canadian dollar – 4 hour Candlesticks

Source: GKFX Prime Metatrader 4

XAG/USD fell to a 3-month low, under support at 25.60 and is now testing round number support at 25. Further support can be found at 24 and then 21.60. - Prepared by Trading Writers*

 

 

CALENDAR

 

 

*Times in GMT

Source: FX Street Economic Calendar

 

SOURCE

https://www.fxstreet.com/economic-calendar
https://www.fxstreet.com/news/rba-tapering-to-be-delayed-to-november-goldman-sachs-202107200346
https://www.cnbc.com/2021/07/19/stock-market-futures-open-to-close-news.html
https://www.poundsterlinglive.com/eur/15700-ecb-to-pave-the-way-for-a-weaker-euro-validus-risk-management