What you need to know on Friday, July 9:
Risk aversion dominated the financial markets. Signs of slowing global growth and a resurgence of coronavirus cases are behind the bad mood. The rapid spread of the Delta variant is raising concerns in Europe, where governments are imposing some restrictions to try to curb the spread.
The EUR / USD pair advanced to 1.1867, but then declined to settle in the 1.1840 price zone. Meanwhile, the European Central Bank has switched to a symmetric inflation target of 2% against a ceiling at that level, allowing for higher inflation to compensate for the previous undervaluation. President Christine Lagarde said they “expect inflation in the medium term to stabilize below our target.” “Our inflation projections for this year are around the 2% mark, which is something we haven’t seen in over eight years.” “However, the increase in prices should decrease to 1.5% in 2022 and 1.4% in 2023.”
The Swiss franc and the Japanese yen performed the best against the dollar, maintaining intraday gains before the close. Commodity-linked currencies, on the other hand, suffered the most, with USD / CAD regaining the 1.2500 threshold and AUD / USD falling to a new 2021 low of 0.7416.
Gold advanced to an intraday high of $ 1,818.37, but trimmed gains during the US session, ending the day with modest losses around $ 1,800. Crude oil prices recovered modestly after the previous drop, and the WTI ended the day at $ 73 a barrel.
European indices closed lower, while US indices posted substantial losses, despite rebounding away from intraday lows. The DJIA lost more than 300 points.
Yields on US Treasuries fell to fresh multi-month lows. The 10-year yield plummeted to 1.25% to finally settle at 1.29%.