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US Dollar Gives Back Gains

Markets are seeing dramatic, strong, long-term risk-off trends powering to new highs in the US Dollar, while risk assets sink.

  1. The strong rise in the US Dollar has halted with a firm bearish retracement over the past day, after the greenback made record highs against the Euro and the Japanese Yen. The USD/JPY currency pair just kissed the round number at ¥145, the highest price seen since August 1998. The EUR/USD currency pair hit a new 19-year low at $0.9866, while the GBP/USD currency pair made a new 37-year low, but by barely a few pips, following the appointment of Liz Truss as the new Prime Minister of the UK. Despite its bearish retracement, there is a strong, long-term bullish trend in the US Dollar, and we are likely to see the currency continue to advance over the coming days.
  2. Markets are awaiting today’s monthly policy release from the European Central Bank, which is widely expected to hike its Main Refinancing Rate by 0.75% from 0.50% to 1.25%, with the key focus on its Monetary Policy Statement and the subsequent press conference by the ECB President Lagarde. This is likely to be a crucial day in the Euro, and we will probably see volatility in Euro pairs and crosses.
  3. The Bank of Canada raised its Overnight Rate by 0.75% yesterday to 3.25% and signalled more hikes ahead in its Rate Statement. This seems to have kept the Canadian Dollar relatively strong.
  4. Bitcoin/USD made a new 18-month low after its notable technical breakdown below the key support level at $19,616 yesterday, and has now recovered somewhat, but it still looks weak.
  5. Stock markets have mostly strengthened along with the US Dollar retracement.
  6. Daily new coronavirus cases globally dropped last week for the seventh consecutive week.
  7. It is estimated that 67.7% 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.  
  8. Total confirmed new coronavirus cases worldwide stand at over 612 million with an average case fatality rate of 1.06%.  
  9. The rate of new coronavirus infections appears to now be most significantly increasing in the Netherlands, Niger, Taiwan, and Russia.  
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