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Risk Off Prompts Flight To Safety

FOREX
  • Weakness across all three major US equity indices follows increased concern over the more transmissible delta COVID variant, bolstering the US dollar as US market participants returned from a National Holiday.
  • Initial overnight greenback weakness was firmly reversed as oil markets began to turnaround with signs of stress following the OPEC+ deal falling through. Additionally, softer US ISM services data further soured sentiment, sparking another leg higher in the dollar and particular weakness in some emerging market FX.
  • In the G10 space, NOK and CAD are the biggest laggards, on the back of the oil move. USDNOK resides 1.45% higher.
  • USDCAD rose to the best levels since late April, posting a high just shy of the 1.25 mark, which coincides with a Fibonacci retracement. A break would open 1.2653, Apr 21 high and an important resistance. Initial firm support lies at 1.2253, Jun 23 low.
  • Elsewhere, EURUSD and GBPUSD had strong reversals lower from their highs and are down 0.35%. EURUSD printed a fresh 1-pip low from Friday, reversing the entire move following the release of US non-farm payrolls last week.
  • AUD and NZD, after being the biggest beneficiaries during the Asia session, also significantly retreated, dropping in the region of 1.5%. BRL had the largest move in EM, where the external and domestic environment amplified losses of 1.85%.
  • Undoubtedly, Wednesday's focus will be on the release of the FOMC minutes.
Energy BulletsCommodities
Energy BulletsCommodities

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