The euro weakened against the dollar. Broad risk-off sentiment pulled the currency pair lower. However, the shared currency recovered on Monday after Dallas Fed President Robert Kaplan said on Friday he might reconsider his hawkish stance (to go with the tapering) if the “fourth wave” of the pandemic harms the economy.
Similarly, the British pound was sinking against the dollar but recovered on Monday. The main driver was the dollar strengthening, but the pound pared some losses due to dovish expectations from the Jackson Hole Symposium to be held on-line on Friday and Saturday. In addition, pandemic figures in the UK eased, while they accelerated in the US. The Japanese yen was little changed against the dollar. Overall, the US dollar was broadly unchanged with extreme volatility.
Gold prices rose surpassing the psychological 1,800 level on Monday. The rally is attributed to two factors. The first one being the broad-based dollar retreat amid easing Fed’s tapering expectations. On the other hand, gold’s safe-haven allure got a boost after concerns intensified over the global economic recovery amid the continuous spread of the Delta variant.
The USA 500 index hit a new all-time high on Monday. Investors were cheered by the increased possibility that Fed Chair Jerome Powell's speech at Jackson Hole on Friday may not indicate a timeline for tapering - the Fed's bond-buying program, and the news that the U.S. FDA, had fully approved the Pfizer/BioNTech vaccine for people aged 16 and older.
Oil prices were in free fall last week but bounced back on Monday and Tuesday erasing most losses. The Delta variant spread with new restrictions and lockdowns imposed in Australia and the Far East, combined with the (continued) rising production in the US, which hit 11.4 barrels per day last week, pulling oil prices sharply down. However, much of the fall in oil prices is attributed to the herd-like behavior of big funds rather than to any material shift in the fundamental outlook for oil markets. This was evidenced by the strong recovery on Monday and Tuesday.