Delta Variant

The delta variant spike and disappointing data from China continued to weigh on markets. As industrial production and retail sales figures from early this week came in the red. Although stocks on Wall Street were able to sustain gains and record closes, it wasn’t the same in the Asian session.

Stocks like Alibaba and Tencent dropped 4.6% and 4.3% shaking investors’ confidence. Signs of an economic slowdown that comes straight after China’s regulatory scrutiny pulled shares lower. Japanese shares were also down with a 0.36% decline in the Nikkei 225.

The S&P 500 and the Dow have been on a winning streak for 5 consecutive sessions buoyed by climbs in Walt Disney. And gains in basic materials and utility sectors. While chaos in Kabul is still limited against market sentiment.

The Fed

Investors shift their focus back to the Fed after Fed member Eric Rosengren has mentioned that another month of strong job figures would pave the way to start tapering. And while we are seeing improved job figures and inflation stabilizing at high levels, markets anticipated a signal about easing. Powell didn’t give any clear indication regarding when easing will occur; however, he did mention that we are heading where the Fed would put away its emergency tools. Powell also calmed concerns about covid-19 affecting the economy or going back to core pandemic levels.

The USD

On another note, safe havens including the USD were able to rise on the back of Afghanistan turmoil. In addition to the delta variant taking a toll on economic recovery. Along with negative U.S. retail sales figures falling 1.1% mainly because of softer Automotive sales.

USDX Hourly time frame (H4)

Gold

Other safe havens like gold also rose, on the back of decreased risk appetites in the market.

Gold Daily time frame (D1)

The NZD

Moreover, the Kiwi fell to a 9-month low of $0.68 after the Reserve Bank of New Zealand decision was to keep rates unchanged. However, the NZD shortly after recovered climbing back to $0.693 as investors knew it will happen sooner or later.

NZD/USD Daily time frame (D1)