- The Australian dollar is shaky against the US dollar, with AUDUSD edging lower.
- The British pound is weakening against the yen amid the growing Brexit settlement standoff.
- Oil prices remain under pressure amid demand concerns on soaring COVID-19 cases.
- US indices are on the back foot at the start of the week after powering to record highs last week.
AUDUSD bounce back from seven-month lows is facing strong resistance as the Australian dollar remains under pressure in the absence of macro-economic data releases at the start of the week. Likewise, the pair’s rally past the 0.7500 level has stalled as bears remain under control.
With 0.7500 emerging as a crucial resistance level, AUDUSD faces the risk of plunging to lows of 0.7410 levels as the dollar continues to strengthen across the board.
A resurgent dollar continues to pile pressure as cautious market mood sends traders into safe-havens and away from riskier bets such as AUD. The dollar index holding firm above 92.00 against the basket of other major currencies should also continue to affirm the bearish bias on the AUDUSD.
The release of the HIS New Home Sales and The National Bank of Australia Banks Business Confidence and Business Conditions data should significantly impact traders’ sentiments on AUD. Additionally, traders await the release of US inflation data on Tuesday as well as FED chair Jerome Powell’s testimony on Wednesday and Thursday.
Pound weakness against the yen
On the other hand, the British pound remains under pressure against the Japanese yen, with the GBPJPY pair tanking to 152.40 levels early in the week.
The sell-off comes at the backdrop of the pair bouncing off two months’ lows last week as the pound remained on the front foot. The sell-off comes at the backdrop of reports that Britain is locked in a dispute with Brussels over the size of the Brexit bill.
Reports that Britain will have to pay £40.8 billion post-Brexit arrangements have not been received well, with the market sending the GBPJPY lower. Additionally, the pound’s sentiments have been weighed heavily by reports that the UK reported the highest number of COVID-19 infections in the past five months.
Oil prices retreat
In the commodity markets, oil prices remain under pressure as a bounce back from two-week lows registered last week stalled. Concerns over slowing global growth continue to evoke worries on OPEC members failing to reach an agreement on supply tightening.
Brent crude for September is down by 1.5% at the time of writing to $74.42 a barrel, with the US West Texas oil down 1.6% to $73.39 a barrel. Both benchmarks were down by about 1% the past week.
The sell-off in the oil markets comes on growing concerns about the spread of coronavirus variants and the potential impact on oil demand. Unequal access to vaccines is already threatening global economic recovery, which oil traders fear will affect oil demand.
US indices correction
After rallying to record highs the past week, US stock indices struggle for direction as the earning season commences. The Dow Jones Industrial Average was up 1.3% the past week as the S&P 500 rallied 1.1 %, and the Nasdaq Composite was up nearly 1% as of the close of business on Friday.
The muted sentiments at the start of the week come at the backdrop of growing concerns about the spread of the Delta variant in the US. With cases spiraling out of control, investors are increasingly running away from risky bets in the equity markets and into safe-havens.
Bitcoin bounce back stalls
In the cryptocurrency market, it’s a mixed start to the week, with major cryptocurrencies holding above key support levels but struggling to breakout. After rallying past the $34,000 level over the weekend, BTCUSD is yet again under pressure, having edged lower and back to the $33,500 level.
Failure to find support above the $34,000 level increases the prospects of the flagship cryptocurrency edging lower as it remains bearish below the $36,000 level; a breach of the $32,000 support level would accelerate a sell-off back to six months lows of $28,000.