The US dollar bounces in a benign risk environment (Daily analysis 8.01.2021)

The US dollar enjoyed a sharp corrective bounce on Thursday. The greenback continues to move higher regardless of the fact that the global equity markets continue to rally and rates continue to rise. The reflationary trade is fully on, which supports crude oil benchmarks.

S&P 500 settled above 3800 pts for the first time in history. WTI trades comfortably above the 50.00 USD/bbl mark. Noteworthy, Bitcoin frenzy goes on. The most popular cryptocurrency tests the 40.000 handle and has already skyrocketed over 35 pct. since the start of the year.

In the case of the FX markets, the EUR/USD pair depreciates but stays above 1.22. The upward trend still might be perceived as intact. The USD/JPY exchange rate jumped significantly from the 102.50 area but, so far, has failed to go above 104.00.

In the emerging markets space, the Polish zloty outperforms after the end-year slump as a rate cut threat fades. On the contrary, the South African rand, which performed strongly in Q4, trades on the back foot this week due to lack of progress on the vaccine roll-out front.