Risk profile remains downbeat on economic fears, oil prices eye second weekly loss

Global trades struggle for clear directions by the end of a two-week-old risk aversion. The sluggish markets drowned the US dollar on Friday, which in turn allowed gold bears to take a breather. However, crude oil prices remain on the back foot at a five-week low as recession fears prevail.

AUDUSD portrayed mild gains ahead of RBA Governor Philip Lowe’s speech while GBPUSD remained pressured on downbeat UK Retail Sales and pessimism surrounding UK PM Johnson’s position. USDJPY cheers firmer inflation data from Japan, as well as softer USD.

Cryptocurrencies portray the market’s indecision as bears take a breather around multi-month lows.

Following are the latest moves of the key assets:

• Brent oil remains depressed around a five-week low, taking rounds to $110.00 at the latest.
• Gold prints mild gains around  $1,830 but stay on the way to posting a two-week downtrend.
• USD Index braces for the first weekly drop in four, down 0.10% around 104.30 at the latest.
• FTSE 100 and STOXX50 both gains around half a percent but the DAX remains indecisive around 12,950.
• Wall Street closed with gains on Thursday, Nasdaq added 1.62%.
• BTCUSD drops 1.0% to revisit the $21,000 area while ETHUSD gains 0.50% as bulls flirt with $1,150 by the press time.

Risk-aversion pauses amid anxious markets

Although the US dollar is on the way to its first weekly loss in four, thanks to the heavy Treasury yields, traders appear to be less confident in the latest relief rally. The same could be witnessed in the market’s rush toward Treasury bonds and the Japanese yen, as well as the downbeat performance of Brent oil.

USDJPY extends pullback from over two-decade high while bracing for the first weekly loss in four. The yen’s retreat could be linked to the increased pressure on the Bank of Japan (BOJ) towards rate hikes amid the second monthly inflation jump and an exodus of foreign bond buyers. Further, AUDUSD also cheers hopes of faster rate hikes but dicey markets restrict the pair’s gains. 

GBPUSD remains pressured on witnessing downbeat UK Retail Sales, following the pessimism from monthly PMIs. Also weighing on the cable is the Conservatives’ defeat in UK by-elections.

Elsewhere, gold appears sluggish for the day but remains down for the second consecutive week while Brent oil prices also print a two-day losing trend and drop for the day too.

BTCUSD suggests the market’s tiring attitude toward cryptocurrencies but the ETHUSD is likely to stay lesser hurt due to the positive news for an upgrade. 

⏫ 🟢 Strong buy: USDCAD

⏬ 🔴 Strong sell: Nasdaq, silver, ETHUSD, Brent oil

⬆️ 🟢 Buy: USD Index, USDJPY

⬇️ 🔴 Sell: DAX, FTSE 100, gold, BTCUSD

Risk catalysts to direct intraday moves

Given the lack of major data/events left for publishing, global markets may witness sluggish moves to end the week. However, the risk-off sentiment is less likely to fade and may keep the JPY on the upper hand, especially considering the downbeat yields.

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