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MTrading Team • 2023-08-07

Crude oil eases from four-month high as supply cut fears contrast with US Dollar rebound

Crude oil eases from four-month high as supply cut fears contrast with US Dollar rebound

Financial markets witness a sluggish Monday, so far, as traders struggle to justify hopes of witnessing softer interest rates amid economic fears. Adding strength to the cautious optimism is China’s stimulus to battle the typhoon fears, as well as infuse funds into the struggling property markets. On the other hand, hawkish comments from Fed officials join the unimpressive US jobs report and cautious mood ahead of this week’s US inflation data to restrict the moves.

Even so, the US Dollar pares losses marked the late last week while NZDUSD justifies expectations of witnessing the RBNZ rate hike, backed by upbeat inflation data, scheduled for Wednesday, to lead the G10 currency buyers versus the Greenback. Following that are the AUDUSD and USDCAD while USDJPY and USDCHF justify the US Dollar’s strength.

Further, downbeat German industrial production and fears of downbeat UK statistics weigh on the EURUSD and GBPUSD.

It’s worth noting that the Oil price rose to the highest level since April, which was also the yearly high, as fears of more supply cuts from Saudi Arabia and Russia joined the stimulus from China. However, fears of higher US Fed rates for longer and China’s struggle to defend economic growth prod the energy bulls afterward.

Furthermore, Gold Price remains pressured while fading the bounce off the monthly low, marked the previous day, whereas equities in the Asia-Pacific zone edge lower even if the S&P500 Futures print mild gains.

Elsewhere, BTCUSD remains pressured after a three-week downtrend but the ETHUSD prints mild gains by the press time.

Following are the latest moves of the key assets:

  • Brent oil retreats from four-month high towards $86.00, mildly offered near $86.10 at the latest.
  • Gold price reverses from a three-week low marked the previous day, down 0.30% intraday as we write.
  • USD Index regains upside momentum after two-day downtrend, up 0.15% intraday near 102.20 by the press time.
  • Wall Street benchmarks closed with minor losses while the stocks in the Asia-Pacific zone edged lower. Alternatively, equities in Europe and UK trade mixed as we write.
  • BTCUSD stays pressured around $29,000 after three-week downtrend but ETHUSD print mild gains to $1,830 of late.
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Mixed sentiment trouble traders

Friday’s softer US NFP joined hopes of more stimulus from China and the major central bankers’ inability to please market players despite rate hikes to entertain the US Dollar bulls. Even so, hawkish comments from Fed’s Bowman join a cautious mood ahead of this week’s US inflation data and downbeat German industrial production to renew the US Dollar buying, which in turn weigh on the prices of EURUSD, GBPUSD, USDJPY and USDCHF. However, fears of witnessing the RBNZ rate hike propel the NZDUSD price despite an absence of major data at home.

Elsewhere, Gold remains pressured as fears of US rate hike and geopolitical woes surrounding China remain on the table, which in turn joins the woes of the softer economic growth in the US and China to prod the crude oil buyers even as they refreshed a four-month high earlier in the day.

That said, BTCUSD fails to cheer news that the US crypto will face hostility from the Senate and the White House as fears of the Bitcoin’s bearish cycle weigh on the prices even as the ETHUSD rebound.

  • Strong buy: USDCAD
  • Strong sell: ETHUSD, GBPUSD, Gold
  • Buy: USD Index, Nasdaq, USDJPY

Nothing major on the calendar

Having witnessed the initial market reaction to German Industrial Production for June, market players have little or no major data/events, which in turn may allow them to extend the week-start moves in favor of the US Dollar.

May the trading luck be with you!