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Dollar in Weekly Loss, but Bullish Bets Pile Up Ahead of Powell, Fed Minutes

The dollar is on course for weekly loss Friday, pressured by a sharp decline in yields, but bets on the greenback have swelled to more than five-month highs as investors believe that the Federal Reserve is on course to rein in loose monetary policy measures by year-end.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.57% to 92.51.

The value of the net long dollar position rose to $3.08 billion in the week ended Aug. 10, from $2.11 billion the prior week, according to data from CFTC and Reuters. That was the highest level since early March. 

The data came just as fresh worries emerge about the threat that surges in cases pose to the economic recovery.   

The University of Michigan Consumer Sentiment index slumped to a reading of 70.2 in the preliminary August survey from 81.2 in July, the weakest reading since December 2011.

“The most jarring and unexpected manifestation of the Delta variant was the collapse in the University of Michigan consumer sentiment,” Jefferies (NYSE:JEF) said.

The dollar retreated, paced by a drop in Treasury yields, with investors seemingly worried that surging Covid-19 threaten to slow the recovery.  

“It’s hard to believe that we’re at it again, but Covid is back in full force and once again threatens to derail economic activity,” Jefferies said in a note.

But fresh worries about Covid-19 weren’t enough to knock the Federal Reserve off the tapering, with some on Wall Street expecting the U.S. central bank to trim its $120 billion monthly purchases by year-end.

“Rising concerns over the Delta variant and increased angst around inflation are not enough to slow the Fed’s march toward tapering, where Fedspeak ramped up this week regarding the timing of an announcement,” Morgan Stanley (NYSE:MS) said. “Indications of continued labor market progress in our MSBCI, updated forecasts, and nascent signs of cooling inflation we think keep the FOMC on track to announce the taper at its December meeting.”

With next week set to bring the further commentary from Federal Reserve Chair Jerome Powell, and the minutes of the Fed’s July meeting, investors appear to be betting on further clues from the central bank on tapering.

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Dollar in Weekly Loss, but Bullish Bets Pile Up Ahead of Powell, Fed Minutes

The dollar is on course for weekly loss Friday, pressured by a sharp decline in yields, but bets on the greenback have swelled to more than five-month highs as investors believe that the Federal Reserve is on course to rein in loose monetary policy measures by year-end.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, fell by 0.57% to 92.51.

The value of the net long dollar position rose to $3.08 billion in the week ended Aug. 10, from $2.11 billion the prior week, according to data from CFTC and Reuters. That was the highest level since early March. 

The data came just as fresh worries emerge about the threat that surges in cases pose to the economic recovery.   

The University of Michigan Consumer Sentiment index slumped to a reading of 70.2 in the preliminary August survey from 81.2 in July, the weakest reading since December 2011.

“The most jarring and unexpected manifestation of the Delta variant was the collapse in the University of Michigan consumer sentiment,” Jefferies (NYSE:JEF) said.

The dollar retreated, paced by a drop in Treasury yields, with investors seemingly worried that surging Covid-19 threaten to slow the recovery.  

“It’s hard to believe that we’re at it again, but Covid is back in full force and once again threatens to derail economic activity,” Jefferies said in a note.

But fresh worries about Covid-19 weren’t enough to knock the Federal Reserve off the tapering, with some on Wall Street expecting the U.S. central bank to trim its $120 billion monthly purchases by year-end.

“Rising concerns over the Delta variant and increased angst around inflation are not enough to slow the Fed’s march toward tapering, where Fedspeak ramped up this week regarding the timing of an announcement,” Morgan Stanley (NYSE:MS) said. “Indications of continued labor market progress in our MSBCI, updated forecasts, and nascent signs of cooling inflation we think keep the FOMC on track to announce the taper at its December meeting.”

With next week set to bring the further commentary from Federal Reserve Chair Jerome Powell, and the minutes of the Fed’s July meeting, investors appear to be betting on further clues from the central bank on tapering.

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Dollar Down as U.S. Consumer Confidence Falls, Trims Fed Taper Bets

The dollar was down on Monday morning in Asia, remaining near a one-week low. The U.S. currency slumped the most in almost seven weeks on Friday after a sharp fall in. U.S. consumer confidence lessened the likelihood of a tighter U.S. Federal Reserve monetary policy.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.02% to 92.498 by 10:45 PM ET (2:45 AM GMT).

The USD/JPY pair edged down 0.19% to 109.36.

The AUD/USD pair was down 0.22% to 0.7352, with the Reserve Bank of Australia due to release the minutes from its latest meeting on Tuesday. The NZD/USD pair inched down 0.02% to 0.7036, with the Reserve Bank of New Zealand due to hand down its policy decision on Wednesday.

The USD/CNY pair inched up 0.01% to 6.4773. China’s industrial production rose a lower-than-expected 6.4% year-on-year in July, while retail sales also disappointed, growing 8.5% year-on-year in the same month.

The GBP/USD pair inched up 0.02% to 1.3866.

Investors digested U.S. economic data from the previous week that said consumer sentiment dropped to its lowest levels since 2011. The Michigan consumer expectations for August was 65.2, while the Michigan consumer sentiment was 70.2.

“Does the survey signal an imminent turn in the U.S. economy? We doubt it given vaccine efficacy remains high and the hit to sentiment likely means more people will get vaccinated… instead, the Delta surge in the U.S. is more a case of delay rather than derail as far as the recovery is concerned,” National Australia Bank (OTC:NABZY) analyst Tapas Strickland said in a note.

Further U.S. data, including core retail sales and retail sales, will be released on Tuesday.

Investors also await the Fed’s next move on asset tapering and interest rate hikes. Fed Chairman Jerome Powell will speak at a virtual town hall meeting with educators and students on Tuesday, with the minutes of its last policy meeting to be released a day later. Later in the month, the central bank will also hold its annual conference in Jackson Hole, Wyoming.

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Now, a coffee-backed cryptocurrency

A new cryptocurrency is making waves in the commodities and financial markets. It is the Coffee Coin that has made a promising beginning since it was launched in early July. It is attracting growers, producers and traders of coffee in Brazil, the world’s largest producer of the coffee. Moneycontrol looks at this unusual cryptocurrency.

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US charges crypto executives for 1st time amid larger scrutiny

As the US goes after the unregulated cryptocurrency market, the Securities and Exchange Commission (SEC) has, for the first time, charged two crypto industry executives of illegally selling over $30 million of securities in unregistered offerings. The two executives from the Blockchain Credit Partners company used the Ethereum blockchain to sell cryptocurrencies to investors while misleading them about the company’s profitability. “The charges came as the Joe Biden government is working on new regulations for the decentralised finance and cryptocurrency markets. The bipartisan infrastructure bill has left cryptocurrency players fuming in the US. (IANS)

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Ethereum posts outflows of $2.8 million in week

Ether, the token used in the Ethereum blockchain, also saw outflows of $2.8 million, from a nearly $9-million outflow the previous week, as per CoinShares data. This comes after Ethereum went through a major software upgrade to stabilise transaction fees and reduce supply of the ether token. Ether’s supply is being reduced through “burning”, in which  tokens are sent to specialized addresses that have unobtainable private keys. (Reuters)

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Bitcoin trading at $44,975

Cryptocurrency prices is in the red on August 13. The global cryptocurrency market cap is $1.88 trillion, a 3.02 percent decrease over the last day, while the total crypto market volume over the last 24 hours is $117.43 billion, which makes a 9.26 percent decrease. The volume of all stable coins is now $92.47 billion – 78.75 percent of the total crypto market 24-hour volume. Bitcoin’s price is currently $44,975.90 and its dominance is currently 44.84 percent, an increase of 0.20 percent over the day.

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USDCHF Price Reverses at $0.90 Level, Aiming at $0.92

USDCHF Price Analysis – August 10

The bulls’ pressure may push the price up to $0.92 price level; above the mentioned level are the following resistance levels; $0.93 and $0.94. Should the bears defend the resistance level of $0.92, the price may reverse and the support levels may be found at $0.91, $0.90, and $0.89.

Key Levels:

Supply levels: $0.92, $0.93, $0.94

Demand levels: $0.91, $0.90, $0.89

USDCHF Long-term Trend: Bullish

USDCHF is on the bullish trend. US dollar is gaining enough strength to propel the USDCHF pair towards the north side. Sellers’ momentum is currently weak as more buyers are coming into the USDCHF market. USDCHF has broken up the resistance level of $0.91 and it is currently increasing towards the resistance level of $0.92.

USDCHF daily chart, August 10

The bulls may continue to dominate the USDCHF market and it is possible to reach the high resistance level at $0.93. The Relative Strength Indicator period 14 is pointing up at 60 levels which indicate buy signal. The bulls’ pressure may push the price up to $0.92 price level; above the mentioned level are the following resistance levels; $0.93 and $0.94. Should the bears defend the resistance level of $0.92, the price may reverse and the support levels may be found at $0.91, $0.90, and $0.89.

USDCHF Medium-term Trend: Bullish

USDCHF is bullish on the medium-term. The currency pair bounces at the support level of $0.90 on August 04. A bullish engulfing candle formed at the mentioned level and increases to $0.91. The just mentioned resistance level is broken up and the price is increasing towards the resistance level of $0.92.

USDCHF 4 hours chart, August 10

USDCHF has crossed the two EMAs upside to continue trading above the 9 periods EMA and 21 periods EMA at a distance. The Relative Strength Index period 14 is at 70 levels displaying a buy signal.

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Dollar Up as Fed Asset Tapering Expectations Grow

The dollar was up on Tuesday morning in Asia, maintaining its resilience over growing expectations that the U.S. Federal Reserve could begin asset tapering sooner than expected.

The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched up 0.04% to 92.977 by 10:53 PM ET (2:53 AM GMT).

The USD/JPY pair inched up 0.06% to 110.34, with Japanese markets reopening after a holiday.

The AUD/USD pair inched down 0.10% to 0.7326 and the NZD/USD pair was down 0.23% to 0.6975.

The USD/CNY pair inched down 0.03% to 6.4835 and the GBP/USD pair inched down 0.05% to 1.3836.

Expectations that the Fed will begin asset tapering boosted safe-haven assets such as the Swiss franc and gold. The euro fell to $1.1732, its lowest since early April 2020.

“The market is repricing the Fed’s tapering. It has only begun and I expect market adjustment to continue. The market will likely test the euro’s low so far this year of $1.1704 marked on Mar. 31,” Rakuten Securities senior strategist Jun Arachi told Reuters.

A stronger-than-expected U.S. jobs report, released during the previous week, saw U.S. Treasury yields climb to three-week highs and a broad rally for the U.S. currency. The report said non-farm payrolls rose by 943,000 and the unemployment rate declined to 5.4% in July.

Atlanta Fed Bank President Raphael Bostic said on Monday that he expects asset tapering to begin in the fourth quarter, but that an even earlier move could be possible should the jobs market maintain its recent pace of improvement.

In Asia Pacific, expectations of an interest rate hike by the Reserve Bank of New Zealand when it hands down its policy decision in the following week continued to give the New Zealand a small boost.

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Dollar in Demand as Bets on Earlier Fed Action Heat Up

The dollar continued its climb Tuesday, riding on the coattails of rising Treasury yields as investors bet the Federal Reserve’s threshold to begin trimming its monthly bond purchases will be met sooner rather than later.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.15% to 913.08, as U.S. bond yields fell, with the U.S. rates continuing to trend higher, with 10-year above 1.4%.

The Federal Reserve has set the bar of sustainable further progress in the economy that needs to met to begin tapering its $120 monthly purchases of bonds. The labor market is at the heart of the threshold, and now some on Wall Street are betting the economy will be able to rack up enough job gains by year-end.

“We expect a Fed tapering announcement in December 2021,” Morgan Stanley (NYSE:MS) said. “[W]e expect to continue mean the economy can reach recovery benchmarks earlier than we had anticipated.”

The odds of the sooner rather later tapering from the U.S. central bank were boosted after several Fed members including Atlantic Fed President Raphael Bostic and Boston Fed President Eric Rosengren backed earlier action on policy from the Fed.

Rosengren said Monday the Fed should announce in September that it will begin trimming its $120 billion in purchases of Treasury and mortgage bonds “this fall.” While Bostic said he is in the favor of faster tapering than in previous rounds.

“We are well on the road to substantial progress toward our goal,” Bostic said Monday. “My sense is if we are able to continue this for the next month or two I think we would have made the ‘substantial progress’ toward the goal and should be thinking about what our new policy position should be.”

Against the backdrop of growing expectations for a sooner rather later monetary policy tightening, Wall Street continued to bet on further dollar upside, supporting by uptick in U.S. yields.

“Strong US data, back-to-school success, ‘advanced notice’ on Fed tapering, and progress on infrastructure make the US stand out. Stay short UST duration, long the USD,” Morgan Stanley said.