China factors, US Dollar’s retreat propel AUDUSD

Global markets appear a bit optimistic on early Friday as China’s rate cut join the nation’s upbeat economics to propel confidence that the world’s second-largest economy will be able to avoid the recession. It’s worth noting, however, that the European Central Bank’s (ECB) dovish hike and fears of witnessing a slowdown in the Eurozone and the UK, backed by the latest data/events, prod the risk takers. That said, the strong prints of US Retail Sales and PPI joined the softer Euro to propel the Greenback the previous day, before the latest retreat from the six-month high.

Yields struggle for clear directions while the Asia-Pacific shares edge higher by tracking their Wall Street counterparts. Further, the Gold price extends the previous day’s rebound from a three-week low and the Oil price stays firmer after refreshing a 10-month high.

AUDUSD gains the most among the G10 currency pairs while USDCNH justifies the strong China data while also portraying optimism among the Yuan traders that the policymakers will be able to defend the economic recovery from COVID-19.

Elsewhere, BTCUSD and ETHUSD both print a four-day uptrend amid concerns about leading crypto assets’ spot ETF applications.

Following are the latest moves of the key assets:

• Brent oil remains firmer at the yearly high, despite retreating to $94.40 by the press time.
• Gold price rises the most in two weeks to extend the previous day’s recovery to around $1,917 as we write.
• USD Index retreats from a six-month high, printing mild losses near 105.20 at the latest.
• Wall Street closed with minor gains but the Asia-Pacific stocks edged higher. That said, equities in Europe and the UK are also up by the press time.
• BTCUSD and ETHUSD print mild gains around $26,600 and $1,630 as we write.

Economic optimism prevails

Be it upbeat prints of US Retail Sales or strong China Industrial Production growth and Retail Sales numbers, not to forget the People’s Bank of China’s (PBoC) 0.25% cut to its Reserve Ratio Requirement (RRR), everything contributes to Friday’s firmer sentiment.

It’s worth noting that the softer prints of the US Core PPI details, however, tamed the hawkish Fed bets and joined the PBoC rate cut to offer an upbeat Wall Street close. The optimism gained momentum during early Friday after China’s Industrial Production and Retail Sales for August print welcome numbers while Japan’s Tertiary Industry Index for July improved.

The risk-on mood and receding hopes of the Fed’s hawkish move in next week’s FOMC prod the US Dollar bulls, especially amid sluggish Treasury bond yields. That said, Asia-Pacific shares also print mild gains, despite slightly offbeat China equities, whereas the European and British equities also edge higher. Further, the risk-barometer AUDUSD pair leads the G10 winners against the US Dollar whereas the USDCAD and USDCHF remain illiquid. It should be noted that the USDJPY, EURUSD and the GBPUSD all print mild gains.

On a different page, Gold price rises the most in two weeks while Brent oil also prints a six-day winning streak to refresh the Year-To-Date (YTD) high. Elsewhere, BTCUSD and ETHUSD continue their two-month-old struggles to overcome the 21-DMA upside hurdle amid the crypto spot ETF approval hopes.

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

Few more clues of US soft landing eyed before a big week

Moving on, some of the mid-tier data from the US and Canada, as well as the Russian central bank’s Interest Rate Decision, will entertain the market players on a likely sluggish Friday. That said, the US Empire State Manufacturing Index, the first readings of the University of Michigan’s Consumer Sentiment Index for September and the US Industrial Production will be in the spotlight as traders seek clues to confirm the US soft-landing ahead of next week’s FOMC.

Further, the Russian central bank is expected to announce a 1.0% hike in its benchmark rate and may help the Ruble to pare recent losses. Additionally, Canada’s Manufacturing Sales for July will join the Consumer Inflation Expectations for the US and the UK to keep the markets alive.

May the trading luck be with you!