Crude oil drops more than 1.0% on growth fears, strong US Dollar

Risk aversion returns to the table, after a dicey start to the week, as worries about the US government shutdown escalate ahead of the October 01 deadline. Adding to this are fears about housing market growth in China and Germany, as well as economic concerns of the Eurozone, the UK and China. Furthermore, hawkish Fed talks and strong yields also contribute towards making the markets jittery and underpinning the US Dollar’s haven demand.

With this, the commodities and Antipodeans have a hard time while the EURUSD, GBPUSD and USDJPY also justify the Greenback’s strength. That said, the prices of gold and crude oil refreshed weekly low with the latter marking more than a 1.0% fall at the latest.

Wall Street closed with minor gains but the Asia-Pacific shares edged lower, which in turn prod equities in the UK and European markets, as well as weighed on the riskier assets.

Elsewhere, BTCUSD and ETHUSD keep struggling amid mixed clues about regulations and market acceptance, as well as optimism about the ETF approvals.

Following are the latest moves of the key assets:

• Brent oil drops to the lowest level in a fortnight to around $92.00, down 1.25% at the latest.
• Gold price extends the previous day’s losses to around $1,910, mildly offered by the press time.
• USD Index prints three-day winning streak at the highest level in 2023 around 106.10 as we write.
• Wall Street closed with minor gains but the Asia-Pacific stocks edged lower. That said, equities in Europe and the UK print mild losses at the latest.
• BTCUSD and ETHUSD print mild losses to around $26,200 and $1,580 as we write.

Risk aversion supersedes data

The anxiety of the US government shutdown and the Fed’s preference for the “higher for longer” rates keep the markets offbeat for a while and defend the US Dollar bulls despite the mixed activity data from the Federal Reserve Banks of Chicago and Dallas. Also acting as a challenge for the US Dollar is Moody’s warning that the government shutdown will be a credit-negative for the US. Even so, the world’s biggest economy still has notably good wage growth and GDP growth, not to forget improving PMIs, to keep the US Dollar and yields on the front foot.

With this, the Gold Price gains the bear’s attention while approaching a short-term key support of around $1,910.

Apart from the US Dollar strength, fears of slowing energy demand from China and likely higher output from some of the key Oil producing nations outside OPEC also weigh on the crude oil.

It should be observed that the crypto markets flash mixed signals as the ex-US markets welcome Bitcoin and Ethereum ahead of the spot ETF approvals but the options market signals and the fears of harsh US regulations challenge the optimism about BTCUSD & ETHUSD.

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

US CB Consumer Confidence

Moving on, the US Conference Board’s (CB) Consumer Confidence, housing market details and the Richmond Fed Manufacturing gauge are some of the key details to watch for intraday directions. However, major attention will be given to the Fed talks and the US government shutdown updates for a better view.

May the trading luck be with you!