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Dollar Retreats From Multi-Month Highs, Commodity-Tied FX Lead Charge

FOREX
  • Broad dollar indices suffered to start the week as a strong bounce in the commodity space helped risk-tied currencies lead global gains.
  • Lingering concerns around Covid and the economic recovery have potentially propelled expectations for a slightly more dovish Powell at Jackson Hole, also lending support to risk assets on Monday.
  • The >5.5% rally in crude futures exacerbated the relief rally in CAD and NOK, both firming ~1.3% against the greenback. Not far behind were Antipodean-FX with AUSUSD and NZDUSD both snapping 5-day losing streaks and rising between 0.9-1.15%.
  • Important to note for USDCAD, Friday's price pattern is a bearish shooting star candle and is a concern for bulls. Should the oil price recovery continue, markets will monitor this pattern as it is a reversal threat.
  • European Flash PMIs were mixed but both the Euro and Sterling took their cues from the dollar. EURUSD (+0.40%) rose above 1.17 and gradually climbed towards 1.1750. Pound Sterling, despite a particularly weak UK services PMI figure, was also on a steady grind that saw GBPUSD 0.8% better off, trading around 1.3730 as of writing.
  • Final reading of German GDP early on Tuesday before US New Home Sales and Richmond Manufacturing Index headline the US docket.
Energy BulletsCommodities
Energy BulletsCommodities

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