Risk-off Sentiment Hits Markets on Monday

US dollar dominates

In the Forex market, the USD index rose more than half a percent as the greenback was seen advancing against all the major currencies, pushing EURUSD toward 1.01 and GBPUSD below 1.20.

Meanwhile, the USDJPY pair jumped above 137 for the first time since October 1998 amid more dovish comments by the BoJ governor. 

Haruhiko Kuroda, the governor of the Bank of Japan, stated earlier in the day that the institution “won’t hesitate to take more monetary easing initiatives as necessary.”

Commodities plunge

Monday saw a little decline in oil prices as new COVID problems in Shanghai stoked worries of more lockdowns and a reduction in demand from the world’s biggest crude importer.

Following the weekend discovery of the highly contagious BA.5 Omicron strain in China’s commercial center, mass screening will resume from Tuesday through Thursday.

Gold, silver, and copper were also seen lower during the EU session as the dominance of the USD usually undermines metals. However, they have not fallen to new cycle lows so far.

Data from China earlier in the day revealed that annual inflation—as determined by the Consumer Price Index—rose from 2.1% in May to 2.5% in June. This number was greater than the 2.4% market consensus.

On Monday, there won’t be any significant data releases in the economic calendar, and risk sentiment is expected to drive market activity. Andrew Bailey, the governor of the Bank of England, will give testimony before the UK Treasury Committee.