The EUR/USD was little changed last week. Due to rapid increases in the number of infections, some European countries introduced more restrictions. Spain, France, Portugal and the Netherlands are facing spikes in the Covid-19 cases. Christine Lagarde, chairwoman of the European Central Bank defended the position against a premature monetary tightening. Mrs Lagarde explained that 2% inflation is not a ceiling according to a new methodology and that ECB would accept “oscillation” around the level.
Similarly, the British pound remained pressured and traded closer to 1.39 at some point despite concerns that Britain's reopening on July 19 could result in a further rise in Covid cases. Daily infections topped in 34,000 in the latest update. Thousands of hospitalizations and hundreds of deaths is a possible scenario in days and weeks to come. The Japanese yen was very volatile but ended the week hardly changed. The acceleration of inflation in the US strengthened the case for a more hawkish Fed in weeks to come pushing the currency pair higher, putting the pressure on the yen and other major currencies on Tuesday.
The gold price rose as concerns about easily spread Delta variant weighed on investors' sentiment. Gold is changing hands above 1,800 dollars benefiting from the upbeat market mood.
The US indexes continued to reach new all-time highs as the new earnings season is set to kick off this week with big banks being the first to present their quarterly results.
Oil prices dropped sharply but consolidated around 73-74 dollars a barrel. OPEC+ is apparently in no rush to reach a deal on increasing output as prices have failed to surge. The rise in demand, faster than supply, is still supportive for oil prices.