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US Dollar Starts Week Strong

Risk sentiment has been hit hard by Powell’s hawkish Jackson Hole speech last Friday, triggering strong flows out of risk and into the US Dollar.

  1. Fed Chair Powell’s hawkish speech at Jackson Hole last Friday, in which he suggested a sustained period of rate hikes will be needed to drive down high inflation and will cause pain to the economy, has triggered a renewed selloff in stock markets and other risky assets, and given a very strong boost to the US Dollar, with the US Dollar Index and the 2-Year US Treasury Yield both trading at very long-term highs, and the GBP/USD currency pair falling to a new 2-year low. There is a strong long-term bullish trend in the US Dollar that looks likely to continue and Forex traders will probably do well to keep that in mind today.
  2. Global stock markets are falling almost everywhere. The S&P 500 Index and the NASDAQ 100 Index are trading well below their Friday closes, and the Japanese Nikkei 225 Index is down by more than 2.5%.
  3. In the Forex market, the US Dollar is the strongest major currency, while the British Pound and the New Zealand Dollar are the weakest.
  4. Bitcoin is trading below $20k but has yet to break below the crucial support level at $19,164.
  5. The Chinese Yuan reached a 2-year low earlier today.
  6. It is a public holiday today in the UK, so trading in the British Pound may be thin before the New York session begins.
  7. Daily new coronavirus cases globally dropped last week for the sixth consecutive week.
  8. It is estimated that 67.6% of the world’s population has received at least one dose of a coronavirus vaccination, while approximately 7.7% of the global population is confirmed to have contracted the virus at some time, although the true number is highly likely to be much larger.  
  9. Total confirmed new coronavirus cases worldwide stand at over 606 million with an average case fatality rate of 1.07%.  
  10. The rate of new coronavirus infections appears to now be most significantly increasing in Haiti, Japan, South Korea, and Russia.  
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