Dollar rises amid rising geopolitical tensions and rising yields
As tensions between the US and China escalated after President Joe Biden received intelligence on the origin of the virus, the dollar strengthened in general. The yen has suffered due to rising bond yields around the world. In addition, a Senate-proposed Tax Plan would permit the transfer of profits abroad, supporting the dollar. Data on capital demand also supported the greenback.
A secret intelligence report received by US President Joe Biden did not prove the virus’s natural origin, according to the Washington Post. China has pledged revenge on anyone who claims the virus has escaped its laboratories days before the US plans to publish the results.
Dollar rising against G-10 currencies with 0.2% growth rate.
The Bloomberg US dollar index rose 0.2%, and the greenback is strengthening against all other G-10 currencies. The offshore yuan dropped after the PBOC inject liquidity into the financial system. In addition to rising yields on European bonds, EUR/USD fell 0.3% to 1.1730; according to traders, sell offers remain above 1.1750, while around 3.9 billion euros are involved in 1.1700 strike options that will expire in the next few days, which could support the euro.
The pound fell by 0.15% against the dollar to 1.3701; UK bond yields rose after wage data showed an increase, and EUR / GBP fell below its 55-DMA to 0.8553. In the short term, the short-term movement of the USD/JPY will be limited by the bottom of the Ichimoku cloud at 110.00, which will limit gains. It is likely that the offer will rise above the high of 110.41 reached on August 13.
Effects of Delta variant on US Dollar growth.
A weaker dollar is expected to boost sterling’s value on Friday following the Federal Reserve’s annual economic symposium.
The British pound rallied earlier in the week, supported by commodities gains. Still, gains were limited by concerns over the COVID-19 Delta option limited any gain some Powell to signal a cut in the Fed’s bond purchases at Friday’s Jackson Hole conference.
Data
US-made capital goods orders remained stable in July, but faster shipments suggest the economy can continue on a steady growth path even if consumer spending slows.
According to the Commerce Department, orders for non-defence capital goods, excluding aircraft, which reflect business spending plans, remained flat in June after increasing 1.0% in June last year.
A Reuter’s poll of economists predicted a 0.5% increase in fixed asset orders.
In June, fixed asset shipments increased 0.6% but rose 1.0% in July. The supply of major capital goods is used to calculate equipment costs in the government’s measure of gross domestic product.
Bottom line
Despite the short and sharp recession that followed the COVID-19 pandemic, business spending on equipment has helped spur economic recovery. In addition to record low-interest rates, massive financial incentives have increased demand for goods.
Despite bottlenecks in the supply chain, momentum has persisted despite signs that consumer spending is falling as the delta variant of the Coronavirus causes new infections to spread.
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