Forex Today: Dollar keeps rallying in a risk-off scenario

What you need to take care of on Tuesday, July 12:

The American dollar reached fresh highs against most major rivals, as the week started in risk-off mode. News coming from China spurred the dismal mood, as inflation in the country surged by 2.5% YoY in June, above the market’s expectations. Furthermore, Shanghai officials reported the first case of the coronavirus Omicron sub-variant BA-5, spurring concerns of a new lockdown in the region just a few weeks after the end of a month-long isolation mandate.

The EUR/USD pair trades in the 1.0040 price zone, its lowest since December 2002. The shared currency is under additional pressure amid an energy crisis. As expected, Russia closed the Nord Stream 1 pipeline for maintenance, although Germany fears it would not reopen it.

The GBP/USD pair trades below 1.1900. The UK’s Conservative 1922 Committee announce that nominations to replace Boris Johnson as Prime Minister will open and close on Tuesday. They would have successive ballots until they reach the final two, which could happen early in the next week. Finally, the results will be announced on September 5.

 Global equities fell ahead of earnings reports and US inflation figures.

 The Australian dollar weakened against its American rival, with AUD/USD trading near a fresh 2-year low of 0.6713. The greenback advanced against the CAD, but USD/CAD remains within familiar levels and trades around 1.3000.

The USD/JPY pair surged to a fresh multi-year high of 137.74, holding nearby despite volatile action among government bonds. Nevertheless, and despite back and forth, the US yield curve remains inverted, hinting at an upcoming recession.

Gold weakened by the end of the day, now trading at around $1,731.00 a troy ounce. Crude oil prices remained stable, with the barrel of WTI now at $103.65.