Forex Today: Gold sell-off extends, dollar reigns supreme amid fiscal impasse, ahead of data

Here is what you need to know on Wednesday, August 12:

US bond yields are on the rise, supporting the recovering dollar and contributing to a sell-off in precious metals. The lack of progress in US fiscal talks and the increase in America’s coronavirus deaths are among the depressing factors. US CPI is eyed.

Gold has been extending its spectacular crash from the all-time high of $2,075, completing a $200 fall. US ten-year bond yields jumped to 0.65%, making the precious metal less attractive. However, the vast majority of the fall seems to be profit-taking. Silver prices, which nearly hit $30, are down below $25.

The US dollar is rising alongside yields and amid growing economic concerns. The White House dropped its demand that states participate in providing additional unemployment benefits, leaving them at $300/week, half the previous level.

It remains unclear if President Donald Trump’s executive orders pass legal muster. Democrats and Republicans have yet to resume talks. Every day that passes means the economy has less government support. 

US daily coronavirus cases have stabilized at a lower level of around 50,000 but deaths spiked to above 1,400 in Tuesday’s reports, the highest since June. While the mortalities curve is off the peak, the increase remains a concern. Texas decided to leave restrictions in place despite the improvement. 

Trump announced the US will be buying 100 million coronavirus vaccine candidate doses from Moderna before the firm completed its Phase 3 trial. Russia’s President Vladimir Putin decided to skip the broad testing phase and register the world’s first COVID-19 vaccine, saying his daughter also received it.

The increase in yields will come to a test with the Consumer Price Index figures for July. An increase in inflation could trigger further returns. 

See US CPI July Preview: Inflation loses its cachet

US politics: Presumptive Democratic nominee chose Senator Kamala Harris as Vice President candidate after a long vetting process. It is unclear if his pick, priced in by betting markets, has an impact on investors. Trump trails Biden by around eight points according to recent polls. 

NZD/USD is falling sharply after the Reserve Bank of New Zealand enlarged its bond-buying scheme from NZ$60 billion to NZ$100 billion, releasing a dovish statement. New Zealand put Auckland under strict restrictions following the emergence of four coronavirus cases, the first ones in over 100 days. The elections are set to be held on September 19, unchanged. 

GBP/USD is holding up above 1.30 after the UK reported a fall of 20.4% in second-quarter Gross Domestic Product, better than expected. The economy shrank 21.7% on a yearly basis.

EUR/USD is trading closer to 1.17 amid dollar strength. Germany’s health minister has called his fellow citizens to remain vigilant amid rising COVID-19 cases in the country. 

Cryptocurrencies fell from the highs, with Bitcoin trading around $11,200 Ethereum shying away from $400 and XRP dropping from $0.30. 

More Market players don’t believe the US Congress will fail to get a second “stimulus” spending package