Aussie and kiwi gain, driven by talk from central banks
Risk sensitive currencies, the Australian and New Zealand dollar were the biggest gainers among major currencies on August 3. Remarkably, the rise was driven by talk from their central banks. Meanwhile, the U.S. currency fell against the Japanese yen and Swiss franc amid some risk aversion in markets.
Aussie boosted after the Reserve Bank of Australia stuck with its plan to ease its bond-buying program. Remarkably, it is shrugging off worries about the economic impact from increasing COVID-19 infections. It surged by 0.5% to $0.7393 versus the greenback.
Meanwhile, the New Zealand dollar gained 0.6% to $0.7007 after New Zealand’s central bank announced on Tuesday that it would soon start consulting on ways to tighten mortgage lending standards. New Zealand’s central bank tries to control an inflated housing market and protect home buyers.
The U.S. dollar declined by 0.1% to 109.21 against the Japanese yen. It was trading close to its July 19 low of 109.07, its lowest since late May. The Swiss franc versus the U.S currency traded at 0.9046 franc. Remarkably, the pair hit a 1-1/2-month low of 0.9038 in the prior session.
The U.S. 10-year Treasury yield sank on Monday. The decline came after an Institute for Supply Management report revealed July U.S. manufacturing growth weakened for the second successive month.
The increasing number of Delta strain of the coronavirus is clouding the outlook further.
Coronavirus hospital admissions in Florida and Louisiana hits a new all-time high. Remarkably, Anthony Fauci, top U.S. health expert, has ruled out another lockdown in the country.
We can only wait and see how the spread of Delta will affect on the Fed’s policy stance
These factors removed any excitement over a $1-trillion infrastructure investment bill. Notably, it could be ready for a final vote this week.
Meanwhile, the euro hit $1.1880, losing some momentum after touching a one-month high of $1.1909 on Friday. The British pound increased by 0.2% to $1.3914, just off Friday’s one-month peak of $1.39835.
According to the head of FX sales at State Street Bank’s Tokyo branch, Kazushige Kaida, we can only just wait and see how the spread of Delta will or will not change the Fed’s policy stance.
Meanwhile, the Asian giant Japan expanded state of emergency curbs to more regions on Monday as infections hit an all-time high in the world’s third-largest economy. Moreover, in China, the spreading Delta variant poses new risks for the country.
In cryptocurrencies, at the time of writing, the dominant cryptocurrency, Bitcoin, is trading at $38,459.20, according to CoinDesk data. Meanwhile, Ethereum, the second-largest cryptocurrency, stands at $2,482.60.
