Yen & Swissie spike on risk aversion

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HEADLINES

• Yen, Swiss franc ascendant, risk aversion pummels Aussie, kiwi
• USD/JPY plummets below 110.0 as US dollar retreats
• XAU/USD regains upside momentum past $1,800 on sour sentiment
• Oil Down, Even as U.S. Fuel Inventory Fall Indicates Demand Surge
• Asian stocks hit 2-mth lows as fast-spreading Delta variant shatters confidence
• EUR/USD: COVID-19 concerns and ECB policy review pose downside risks – MUFG

FOREX

Yen, Swiss franc ascendant, risk aversion pummels Aussie, kiwi

The safe-haven yen and Swiss franc stood tall on Friday, while risk-sensitive currencies including

the Australian and New Zealand dollars languished near multi-month lows as investors turned cautious about the global economic recovery. Bonds have rallied while stocks took a hammering worldwide amid growing concerns the fast-spreading Delta variant of COVID-19 could derail a revival that is already showing pockets of weakness.

USD/JPY plummets below 110.0 as US dollar retreats

USD/JPY edges lower on Friday in the initial Asian session following the previous day’s sharp downside movement. The pair fell more than 100-pips as risk sentiment sours on the US and global growth jitters. The US Treasury yields edged lower 1.30% on the expectations that Fed will not tighten monetary policy soon. US Initial jobless claims came at 373 K, above the market forecast. The readings showed that the labor market recovery remained far from the Fed's expectation.

COMMODITIES

XAU/USD regains upside momentum past $1,800 on sour sentiment

Gold (XAU/USD) reversed the early Asian pullback, picking up bids to refresh intraday high around $1,808, heading into Friday’s European session. In doing so, the yellow metal rejects the previous day’s pause of the six-day winning streak even as the US dollar index (DXY) and the Treasury yields rebound.

Oil Down, Even as U.S. Fuel Inventory Fall Indicates Demand Surge

Oil was down Friday morning in Asia even as data released on Thursday said U.S. fuel inventories fell and demand surged as economic recovery drove consumption.

Crude oil supply data from EIA showed a draw of 6.866 million barrels. Forecasts prepared by Investing.com predicted a 4.033 million-barrel draw, while a 6.718 million-barrel draw was recorded during the previous week. The EIA also said fuel demand surged to 10 million barrels a day in the week before Jul. 4 U.S. holiday.

STOCKS

Asian stocks hit 2-mth lows as fast-spreading Delta variant shatters confidence

Asian shares stumbled to two-month lows on Friday and were set for their worst weekly performance since February as confidence took a beating over the global spread of the Delta virus variant and worries it could stall a worldwide economic recovery.

Investors flocked to the safety of bonds overnight with 10-year U.S. Treasury yields reaching levels not seen since February.

ANALYSIS

EUR/USD: COVID-19 concerns and ECB policy review pose downside risks – MUFG

“According to reports, the ECB have agreed to raise their inflation goal to 2% and allow room to overshoot it when needed.” 

“We expect market participants will be sceptical as well over the ECB’s ability to generate an inflation overshoot compared to the Fed. As a result, the ECB should have less success than the Fed at attempting to lift inflation expectations and lowering real yields. On balance though it is another negative development for the euro but is unlikely to be a game changer at the current juncture.”

“In March, the EUR/USD pair hit an intra-day low of 1.1704 before rebounding which provides the next key support level.”

CHART

Pound / Yen – Daily Candlesticks

Source: GKFX Prime Metatrader 4

GBP/JPY has broken below a rising trendline in a sign the multi-month uptrend is reversing. The first downside target could be the demand area created in March near 149. - 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/eur-usd-covid-19-concerns-and-ecb-policy-review-pose-downside-risks-mufg-202107080753
https://www.fxstreet.com/news/gold-price-forecast-bears-testing-bullish-commitments-at-daily-support-202107081933
https://www.investing.com/news/commodities-news/oil-down-us-fuel-inventory-fall-shows-demand-surge-2553542
https://www.investing.com/news/stock-market-news/asian-stocks-hit-2mth-lows-as-fastspreading-delta-variant-shatters-confidence-2553547
https://www.reuters.com/article/global-forex/forex-yen-swiss-franc-ascendant-risk-aversion-pummels-aussie-kiwi-idUSL3N2OL0B4