AUDUSD snaps three-day winning streak amid dicey markets, downbeat Australia data

Market sentiment remains divided as the cautious mood ahead of this week’s top-tier data/events contradicts optimism triggered through the latest US data. Also challenging the momentum are the mixed geopolitical headlines surrounding the Middle East and China.

With this, the US Dollar Index (DXY) licks its wounds at the lowest level in two months, snapping a three-day losing streak after falling the most in three weeks. That said, EURUSD seesaws at the highest level since late March as traders prepare for Thursday’s European Central Bank (ECB) monetary policy meeting announcements and Friday’s US employment data. Additionally, the mostly confirmed odds of the ECB’s rate cut challenge the Euro bulls but the lack of price-positive US data propels the major currency.

Further, GBPUSD struggles to defend a three-day uptrend, retreating from the highest level in 11 weeks by the press time, as political anxiety in the UK joins the US Dollar’s corrective bounce despite doubts about the Fed’s rate cuts in 2024, especially after recently mixed US statistics.

USDJPY hovers around the lowest level in a fortnight as softening Japan Monetary Base raises doubts about the Bank of Japan’s (BoJ) inflation optimism. Also challenging the Yen pair’s latest move is the lackluster bond yields.

Elsewhere, AUDUSD bears the burden of downbeat Company Operating Profits, Weekly Consumer Sentiment, and Current Account while NZDUSD follows suit as economic uncertainty in New Zealand clouds the Reserve Bank of New Zealand’s (RBNZ) hawkish tone. It should be noted that the USDCAD witnesses a double beating on the downbeat crude oil prices and hopes of seeing a rate cut from the Bank of Canada (BoC).

Crude Oil refreshes a four-month low despite the softer US Dollar as market players fear softer energy demand and an easing in the supply cuts, as well as receding geopolitical tensions. Conversely, Gold price remains defensive after rising the most in two weeks as optimism about witnessing lower rates jostles with mixed feelings for China and geopolitical tensions.

The crypto market remains dicey as optimism about spot ETF approvals contradicts the doubts on ETF launch timelines and the US SEC’s harsh stand against e-currencies. With this, the ETHUSD prints a three-day losing streak while BTCUSD struggles to defend a three-day uptrend.

Following are the latest moves of the key assets:

• WTI Crude oil drops for the fifth consecutive day to $73.30 by the press time, refreshing a five-month low.
• Gold pares the previous day’s gains while posting mild losses near $2,345 as we write.
• The USD Index rebounds from a two-month low to print the first daily gain near 104.10 at the latest.
• Wall Street closed mixed but the Asia-Pacific shares dropped. That said, British and European shares remain downbeat during the initial trading hour.
• BTCUSD prints mild gains near $68,900 but the ETHUSD stays pressured for the third consecutive day to $3,760 as we write.

Data weighs on US Dollar but markets remain dicey ahead of key catalysts…

The US Dollar began the week on a back foot as a three-month low US ISM Manufacturing PMI joined a downbeat US Q2 GD forecast of the Atlanta Fed’s GDPNow model. The second-tier data traces disappointing inflation clues released previously and raises concerns about the US Federal Reserve’s (Fed) capacity to defend the current rates in 2024. However, China’s inability to propel investor confidence despite heavy investment and Israel’s resistance to accept truce terms in Gaza unless toppling Hamas put a floor under the Greenback.

Elsewhere, the pre-ECB bias challenges the EURUSD bulls even as the latest headlines have been impressive about the bloc’s soft landing. Meanwhile, GBPUSD bears the burden of the UK’s political uncertainty after Nigel Farage entered the race and raised bars for Conservatives. Also challenging the Pound buyers is mixed news for the British economic transition.

While the US Dollar’s slump drowned the USDJPY pair, BoJ Governor Kazuo Ueda's comments test the pair sellers. Earlier in the day, BoJ Governor Ueda said that if inflation moves as expected, will adjust policy. However, the latest Japanese data suggests easing inflation conditions and hence defending the current policies, which in turn puts a floor under the Yen pair prices.

AUDUSD and NZDUSD fail to ignore the market’s cautious mood and mixed feelings about the economic conditions in Australia and New Zealand, even as the US Dollar’s weakness tests the Antipodean sellers. On the contrary, softer Crude Oil and the dovish BoC woes weigh on the Canadian Dollar (CAD). Gold defends its charm as a haven asset during uncertain times even if the lackluster markets challenge XAUUSD buyers of late.

• Strong buy: USDCAD, USDJPY, US Dollar, Silver
• Strong sell: AUDUSD, NZDUSD, GBPUSD
• Buy: BTCUSD, ETHUSD, Nasdaq, Gold, DJI30, USDCNH
• Sell: DAX, FTSE 100, EURUSD, Crude Oil

US Factory Orders, political news will entertain intraday traders…

While the week-start moves are fading early Tuesday, traders should remain cautious of the Greenback’s recovery ahead of the US Factory Orders and the second-tier housing data. Also important to watch will be the headlines about the political jitters in India, the UK, and the Middle East. Furthermore, anxiety ahead of this week’s monetary policy announcements from Europe, Canada, and India will also challenge the market moves. Hence, it’s wise to expect the market’s consolidation in the absence of any surprises.

May the trading luck be with you!