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Denis Sergienko • 2022-09-30

Softer USD entertains traders amid sluggish markets, oil, gold rise

Softer USD entertains traders amid sluggish markets, oil, gold rise

Global markets turn dicey by the end of a volatile week, which in turn allowed the US dollar bulls to take a breather amid quarter-end consolidation. The same helped the commodities and Antipodeans to remain firmer while GBPUSD has additional reason to rise in the form of upbeat GDP data.

USDJPY, on the other hand, struggles to cheer the softer greenback as yields remain strong. On the same line is the USDCHF as Swiss Retail Sales eased.

Elsewhere, gold and crude oil refresh weekly tops as expectations of stimulus from Japan, China and the UK direct traders towards somewhat riskier assets than the US dollar.

Talking about cryptos, BTCUSD and ETHUSD grind higher amid industry-positive news and also because of the softer USD.

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Following are the latest moves of the key assets:

  • Brent oil brace for the first weekly gain in five, up 1.30% near $89.50 on a day.
  • Gold takes the bids to refresh daily top near $1,675 with intraday gains of 0.70% as we write.
  • USD Index flirts with the weekly low while printing a three-day downtrend near 111.70.
  • FTSE and Eurostoxx both gain near 1.0% each while the FTSE is up almost 2.0% by the press time.
  • Wall Street closed with notable losses led by Nasdaq’s 2.84% downside.
  • BTCUSD remains sidelined near $19,600, up for the week, whereas ETHUSD prints mild gains around $1,350.

It is not risk-on!

Although the US dollar eased and allowed riskier assets to pare recent losses, the market’s sentiment remains sour as fears of the recession, as well as aggressive rate hikes, remain on the table. Also challenging the risk appetite are the latest allegations over the Russian gas pipeline and Moscow’s readiness to annex Ukraine.

That said, stimulus headlines from Germany, Japan, China and the UK are likely to have soothed the market’s plan of late. This joins with the upbeat data from Britain and Japan to improve the mood. It’s worth noting that China’s mixed PMIs and economic woes are also among the negatives for the market.

Above all, the looming global recession and inflation fears, as well as the supply crunch fears, keep traders on their toes ahead of the Fed’s preferred inflation gauge.

On a different page, the early signals of OPEC+ output cut join fears of supply disruptions to help the oil prices stay in the recovery mode. Gold prices also remained firmer on a day.

Elsewhere, news of NFT cross-posting and Blackrock’s new ETF launch in Europe helped BTCUSD and ETHUSD to stay sturdy on a weekly basis.

  • Strong buy: AUDUSD
  • Strong sell: ETHUSD
  • Buy: USD Index, USDCAD, Nasdaq, USDJPY
  • Sell: DAX, FTSE 100, gold, BTCUSD

All eyes on inflation

Be it the Eurozone CPI and HICP or the US Core PCE Price Index, inflation readings are the key for today. Given the impending rate hikes, the firmer inflation data could challenge the recently upbeat sentiment and can recall the US dollar buyers. However, a lack of buying during the month-end and the quarter-end might test the greenback’s recovery moves.