Forex Today: The dollar benefits from risk aversion at the beginning of the week

This is what you need to know to trade today Monday May 9:

The risk aversion is helping the US dollar find demand as a safe haven at the start of the new week and the DXY dollar index is trading at its highest level since November 2002 above 104.00. Sentix investor confidence data will be included in the European economic calendar. There will be no high-level US data released on Monday, suggesting that market sentiment is likely to continue to drive financial markets.

Reflecting the poor market mood, US stock index futures are down 0.85%-1% at the start of the European session. Meanwhile, the 10-year US Treasury bond yield, which rose almost 7% last week, is moving sideways above 3.1%. In the Asian session, data from China revealed that the trade surplus widened to $51.12 billion in April. On an annual basis, imports decreased 2% and exports increased 3.9% in the same period.

In a report released over the weekend, the International Monetary Fund said they expect global growth to be close to the pre-pandemic average of 3.5%. “It could still slow more than expected, and inflation could turn out higher than expected“, the IMF has added in its publication.”This may be more salient for parts of Europe, given their relatively greater reliance on Russian energy imports.“.

The EUR/USD is going down towards 1.0500 at the start of the European session on Monday. The European Union’s foreign policy chief, Josep Borel, told the Financial Times on Monday that the EU should consider taking Russian reserves to help pay for the cost of rebuilding Ukraine after the war. Meanwhile, the member of the Governing Council of the European Central Bank, Olli Rehn has reiterated that they can start raising rates in Julybut this comment has failed to help the common currency find demand.

After last week’s sharp drop, the GBP/USD remains on the defensive at the start of the new week, now trading at its lowest level since June 2020 around 1.2270.

Supported by the broad-based strength of the dollar, the USD/JPY remains above 131.00 and nearing multi-decade high which it established at 131.25 in late April.

The Prayed It records losses for the third week in a row and trades in negative territory near $1,870 on Monday. Although risk aversion helps the precious metal limit its losses for now, another move higher in US yields could force the price of gold to continue to push lower.

The Bitcoin it fell sharply over the weekend and extends its decline on Monday. BTC/USD is trading at its lowest level since late January at $33.5K, down 1.7% on the day. The Ethereum closed the previous four days in negative territory and cannot now shake off the downside pressure. At time of writing, ETH/USD is down 3% on the day at $2,430.