AUDUSD bears cheer sour sentiment, lack of hawkish signals from RBA, PBoC

The risk profile remains downbeat as full markets return on Tuesday, after an extended weekend in the US. Even so, the US Dollar struggles to extend the previous two-day recovery as yields remain depressed amid a lack of major catalysts.

While tracing the main catalysts for the sour sentiment, fears of slowing economic recovery in China and hawkish central bank bias in the US, Europe and the UK gain major attention.

The same joins downbeat RBA Minutes and PBoC rate cuts to make the AUDUSD pair the biggest loser among the G10 currency pairs. That said, the NZDUSD pair takes the second rank while USDCHF occupies the third position.

It’s worth observing that the EURUSD, GBPUSD and USDJPY remain mostly dicey whereas prices of Brent Oil drop. However, the Gold recovers as share traders in the Asia-Pacific zone struggle for clear directions and the US stock futures print minor losses.

Cryptocurrencies are also depressed even as bears lack momentum amid mixed industry signals.

Following are the latest moves of the key assets:

• Brent oil struggles to reverse the previous day’s losses, picking up bids to $73.30 by the press time.
• Gold price prints the first daily gains in three near $1,955 at the latest.
• USD Index fails to extend two-day run-up, mildly offered near 102.50 as we write.
• Asia-Pacific shares edge lower but the equities in the UK and Europe trade mixed by the press time.
• BTCUSD and ETHUSD remain depressed near $26,800 and $1,730 respectively at the latest.

Risk aversion, central bank plays offer a good ‘actual’ start to the week

Looming fears of slower economic recovery in the world’s biggest industrial player China join expectations of higher rates at the top-tier economies to bolster the market’s risk-off mood on early Tuesday. The sour sentiment also takes clues from the US-China tension as the latest round of talks appears less lucrative amid Taiwan issues.

Elsewhere, hawkish expectations from the ECB and the BoE, as well as downbeat yields, allow the Euro, Cable and Yen to battle with the recently firmer US Dollar. It should be noted that the fears of no Fed rate hike past July challenge the greenback’s upside momentum ahead of Fed Chair Powell’s Testimony.

It should be noted that the tug-of-war between the Crypto industry players and the US SEC keeps weighing on the BTCUSD and ETHUSD prices even as institutional demand and the options market are still far from turning pessimistic.

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

Full markets, second-tier data in focus

Although the economic calendar in the West appears less interesting for Tuesday, the return of the US traders will join the mid-tier statistics to entertain the intraday traders. In that case, the EURUSD, USDJPY and GBPUSD appear important to watch as ECB and BOE hawks flex muscles while BoJ pushes back the market’s hawkish expectations.

May the trading luck be with you!