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MTrading Team • 2022-07-15

Bears take a breather as the last round of data release looms

Bears take a breather as the last round of data release looms

The market’s pessimism eased in early Friday as Fed speakers tried to tame expectations of a 100 bps rate hike after strong PPI. The corrective pullback could also be linked to the easing yield curve inversion and cautious mood ahead of US Retail Sales, as well as the University of Michigan’s Consumer Sentiment Index. 

The sluggish sentiment ignored China’s downbeat Q2 GDP and firmer Retail Sales but the AUDUSD dropped the most among the G10 currency pair, while portraying the risk-off mood. Further, the US dollar remains firmer around the multi-year high marked the previous day while gold stays pressured at the YTD low.

It’s worth noting that oil prices fade the bounce off a five-month low and USDJPY struggled for clear directions after refreshing 23-year high the previous day.

Cryptocurrencies brace for the second weekly gain amid more funding but buyers appear reserved due to the slump in mining costs.

Following are the latest moves of the key assets:

  • Brent oil fades bounce off five-month low, down 1.00% intraday near $100.00.
  • Gold stays pressured at yearly low as sellers attack $1,700 threshold, down 0.40% at the latest.
  • USD Index prints mild losses at the highest levels since 2002, down 0.10% intraday near 108.53 by the press time.
  • FTSE 100 is mildly up but STOXX50 and DAX gain nearly 1.5% each of late.
  • Wall Street closed with mixed numbers as buyers failed to keep control after an upbeat start.
  • BTCUSD and ETHUSD both gain near 1.5% as bears attack the $20,800 and $1,200 levels at the latest.
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Markets are not out of the woods…

Although the US stock futures print mild gains and the US dollar also retreats, the fears of recession, as well as aggressive central bank actions to tame inflation, keep weighing on the risk appetite.

It’s worth noting that the Fed policymakers tried to rein the bears during their last round of public appearances before the pre-FOMC blackout but nobody appears to believe that 75 bps is the only thing on the Fed’s table for July. Fears of Eurozone slowdown deepens as the political crisis in Italy joins chatters that Russian gas supplies to Germany and Italy will be off even as the Nordstorm 1 pipeline resumes post maintenance halt.

Elsewhere, China’s downbeat Q2 GDP and Industrial Production spoke louder for the bears but the Retail Sales and Beijing’s recent positive steps to increase trades with Australia and the US appear to keep pessimism in check. On the same line could be the heavy stimulus and easing covid numbers.

Amid these plays, the USD Index consolidates third weekly gains around the highest levels since late 2002. The same allows EURUSD and GBPUSD to print corrective pullback from multi-month low but AUDUSD and NZDUSD have nothing to cheer about. On the same line could be the crude price that remains pressured and so do USDCAD, not to forget USDJPY.

BTCUSD and ETHUSD surprisingly gain some ground as 5ire raises $100 million to fund the expansion of blockchain. The leading cryptos also portray the lowest mining costs in 10 months.

⏫ 🟢 Strong buy: USDCAD

⏬ 🔴 Strong sell: Nasdaq, silver, ETHUSD

⬆️ 🟢 Buy: USD Index, USDJPY

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

US data, Fed policymakers in focus

Moving forward, US retail sales and consumer sentiment data will be crucial for markets as the greenback bulls seek firmer prints to defend the hawkish fed bets. Also, comments from the Federal Reserve (fed) policymakers are important as they as go into silence after the weekend.

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