June 21, 2021
EUR/USD: The EUR rose against the USD. While US Treasury yields appear to carry the burden of lowering inflation expectations, the US Dollar Index (DXY) remains at the leading edge near early April levels after its strongest weekly jump in three months.
Behind these moves may be growing concerns about the rate action of the US Federal Reserve and uncertainty over the infrastructure and spending plan of US President Joe Biden. After the Federal Open Market Committee (FOMC), St. Louis Federal Reserve President (FRS) James Bullard predicted a hawkish tilt in the Fed’s policy.
GBP/USD: The GBP/USD keeps trading lower on Monday while trailing the previous seven sessions’ downside movement. The pair traded in a very narrow range before slipping below the 1.3800 mark.
Market participants ditched the GBP after a prolonged lockdown in the UK as the country was unable to adhere to its existing plan for a full economic opening on June 21 due to rising coronavirus cases. Meanwhile, retail sales in the UK fell unexpectedly in May. Headline inflation rose more than expected in May to its highest level since July 2019 and topped the Bank of England’s (BOE) target of 2.0%.
XAU/USD: The XAU rose against USD for the first time in one week, having found some support just above $1760. The ongoing decline in the US Treasury yield curve is saving the day for the gold bulls. Decreased inflation expectations and uncertainty over US infrastructure spending plans weigh heavily on market yields as investors rethink the Fed’s belligerent stance. Gold fell 6% last week after the Fed warned of a rate hike earlier than expected, killing demand for interest-free gold. Last Friday, gold hit its lowest level in two months at $1760. In general, there is a positive outlook for the growth of gold.