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Currency Market Analysis

Jul 26, 2021 | Currency Market Analysis

Global Themes

Greenback stronger as US shares hit new highs; Fed in focus

The US dollar was mostly higher as strong results from the US earnings season boosted sharemarkets.

All three major US shares, the Dow Jones, S&P 500 and the Nasdaq closed Friday at new all-time highs.

This week’s critical US Federal Reserve meeting will be key with much of the recent selling across markets driven by fears of that the Fed might soon taper back its stimulus program.

The Fed meets on Wednesday night.

EUR hit

The USDSGD gained 0.2%.

In other markets, the euro remained subdued after the European Central Bank extended forward guidance and suggested rates were likely to stay lower for longer than previously expected.

The Japanese yen fell sharply as the improvement in US shares boosted risk appetite.

The JPYSGD fell to two-week lows.

The AUD fell on Friday as looked to potentially resume its recent downtrend. The AUD remains pressured by worries about the length and impact of lockdowns across Sydney, Melbourne and Adelaide.

Fed key

In a busy week as busy week for FX markets, Tuesday night sees US consumer confidence while Wednesday brings Australian inflation numbers.

Wednesday’s inflation reading will be key for the Reserve bank of Australia as it weighs up its response to the Delta variant outbreak.

The US Fed, due Wednesday night, is the clear highlight, while the first reading of US second-quarter GDP, due Thursday evening, will also be closely watched.


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