Weekly Forex Market Recap: Aug. 2

The major currencies were mixed, but it looks like the Kiwi was the top currency this week, likely on positive leaning risk sentiment and continued speculation of a rate hike coming after a positive New Zealand jobs report.

Notable News & Economic Updates:

Intermarket Weekly Recap

Dollar, Gold, S&P 500, 10-yr Treasury Yield, Oil, Bitcoin

It was a mixed bag of emotions this week as traders tried to position on a slew of top tier themes and stories. It was a heavy week of central bank highlights, including the RBA’s insistence to continue with tapering, expectations of rate hike in New Zealand, and lots of commentary from Federal Reserve members on when we may see tapering in the U.S.

It all started with risk-off vibes on Delta variant concerns and disappointing PMI data, but by Wednesday, it looks like the market went with positive vibes after a very positive ISM Services PMI number showed that the economic recovery is still on track. This was likely the reason why we started to see equities rebound, along with U.S. Treasury yields as the 10-year yield bottomed out around 1.14% before starting its climb higher.

Not too long after that, Fed Member Clarida signaled that a taper may come as soon as the end of 2021, sparking a bullish reaction in the Greenback that lasted into the weekend, with the help of better-than-expected U.S. employment numbers on Friday to support tapering speculation.

Gold and oil were net losers as the U.S. dollar gained strength, while bitcoin and the rest of the crypto space was all over the place thanks to potential issues with proposed crypto regulations in the U.S. infrastructure bill and continued crypto adoption headlines (e.g., Uruguayan senator introduces bill to enable use of crypto for payments, JPMorgan has launched an in-house bitcoin fund for private bank clients, Google’s New Cryptocurrency Ad Policy Goes Into Effect)

In the currency space, the bulls favor the Kiwi this week as speculation of a rate hike coming from the Reserve Bank of New Zealand intensified after a very solid beat in the New Zealand employment report. While the euro and Swiss franc were the biggest losers, possibly on signals from business surveys that Europe’s recovery may be slowing relative to the rest of the major economies who continue to show accelerating strength.