Geopolitical risks rise, dollar higher, stocks lower
Geopolitical events have markets in a ‘risk-off’ mood, putting pressure on global stocks and fueling demand for US dollars. Russia announced it will stop using dollars in its big oil investment fund, timed to take effect prior to Russian President Putin’s summit meeting with President Biden in two weeks. Also, Biden announced plans to amend a ban on US investments into companies linked to the Chinese military, which may expand inspection of a wider set of companies. Lastly, Israeli PM Netanyahu, after 12 years in power, may be ousted after opposition parties agreed to form a new government. US T-bond yields and oil prices are slightly higher. Traders await tomorrow’s US labor data, expected to show an improved employment picture.
June 3, 2021
EUR/USD 1.2147 GBP/USD 1.4131 USD/CAD 1.2100 AUD/USD 0.7682 USD/JPY 110.0900 USD/CNH 6.3970 USD/ILS 3.2537 USD/MXN 20.0358 USD/CHF 0.9026 USD/INR 72.9113 USD/BRL 5.0762 USD/SGD 1.3272 USD/DKK 6.1207 USD/SEK 8.3268 USD/NOK 8.3671
The dollar is broadly higher, fueled by market nervousness associated with several geopolitical events, but also ahead of tomorrow’s US labor data for May which is expected to be upbeat.GBP
The UK pound gave up early gains after news that the UK may delay the reopening of its economy, scheduled to begin June 21. Traders are optimistic that any delay would be limited to a few more weeks.EUR
The euro is slightly lower, as traders adjust positions ahead of tomorrow’s US labor data and next week’s (June 10th) meeting of the European Central Bank.CAD
The loonie is lower, in-line with broad strength in the US dollar. Oil prices are slightly higher and there are no Canadian data releases today.ASIA/PACIFIC
The Chinese yuan weakened overnight ahead of tomorrow’s US jobs data, and as Chinese officials step up efforts to contain the rally in the yuan. One of China’s key policy banks has announced it will offer US dollar bonds onshore for the first time since 2015, which is the latest move to ease bullish sentiment for the yuan.
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