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The US dollar started the first day of the trading week weaker than the previous week, losing ground against most rival currencies. In the US session, afternoon, the dollar bounced back, as Wall Street was not able to retain its early gains and eventually headed to the red territory.
Commodity-linked currencies hold on to most of their early gains, with AUD/USD trading at 0.6815 and USD/CAD at 1.2965. Finally, safe-haven JPY and CHF posted modest gains against the USD. Crude oil prices, on the other hand, retain most of their early gains, with WTI now trading at $98.80 a barrel.
The softer dollar helped the GBP/USD pair to reach 1.2039, but the pair retreated towards the current 1.1960 area amid a worsening market sentiment by the end of the day.
The US dollar began retreating on Friday as US encouraging data provisionally cooled recession-linked fears. An almost quiet macroeconomic calendar on Monday kept the dollar on the downtrend ahead of central banks’ decision. The US Fed entered its brownout period ahead of next week’s meeting, while the ECB will announce its monetary policy next Thursday.
Economic Data
The economic calendar witnessed a quiet day. Home builders’ confidence in the housing market significantly fell in July, dropping to 55 in the National Association of Home Builders (NAHB) Housing Market Index (HMI) released on Monday. The new reading is a major drop from the 67 reported in June, the lowest number reported in the index since the midst of the pandemic in June 2020.
Other Developments
Gold aimed to recover some ground, but ended the day at around $1,708 per ounce. The precious metal is at risk of falling further.
The looming energy crisis is raising new fears in Europe, this could be a game changer in EUR/USD pair’s performance, which recovered up to 1.0200.
Russia’s Gazprom declared force majeure on supplies and said it could not guarantee gas supplies to Europe because of “extraordinary” circumstances. The International Energy Agency has warned the EU must reduce gas consumption ahead of the winter. The pair currently trades at around 1.0150.
Shares of Coinbase closed up 9% on Monday as cryptocurrencies like bitcoin and ether began the week rallying. Bitcoin was trading at $22,269, up around 6%, according to Coinbase data. Ethereum also jumped unevenly 10%, trading at $1,478.
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