Crude Oil extends week-start retreat amid sluggish sentiment ahead of key PMIs

The risk complex remains unclear early Tuesday, after a dull start to the eventful week. Major currencies rose against the US Dollar despite a corrective bounce in the Treasury bond yields. 

USDJPY appeared an exception as talks of the Bank of Japan’s (BoJ) exit from ultra-lose monetary policy faded whereas GBPUSD rose the most among the major currency pairs as traders reassessed chatters about the Bank of England’s (BoE) delay in rate cuts and the UK’s economic hardships.

Gold price to the highest level in 2024 as traders rush to the risk-safety amid sluggish markets and softer US Dollar. It’s worth noting, however, that the crude oil failed to defend the early Monday’s uptick and rather closed on a negative note, extending losses of late, as market players expect lesser demand and ignore news of OPEC+ extension of the supply cuts.

BTCUSD and ETHUSD rose to a fresh multi-year high as crypto traders expect more fund inflow amid the market’s rush for riskier assets, as well as due to the optimism surrounding ETF approvals. It’s worth noting that a consolidation ahead of Bitcoin halving prod the BTCUSD bulls but the Ethereum price rises to a fresh high since early 2022.

Following are the latest moves of the key assets:

• Brent oil extends the week-start losses toward $83.00, down half a percent at the latest.
• Gold price remains firmer at the highest level in 2024 while flirting with the $2,120 level by the press time.
• USD Index stays defensive around 103.90, struggling to extend the previous day’s rebound from the 200-SMA.
• Wall Street closed with minor losses and the Asia-Pacific stocks drifted lower. Further, the shares in Europe and the UK remain slightly offered during the initial hour.
• BTCUSD and ETHUSD both seesaw near the multi-month high, close to $66,500 and $3,690 at the latest.

Crude Oil fails to recover despite sluggish US Dollar…

The Bank for International Settlements (BIS) cited investors’ expectations of a very soft landing in the major economies and a decreasing gap between the market’s expectations of rate cuts from top-tier central banks and signals from the key central bank officials to test previous optimism.

This challenged the commodity buyers and put a floor under the US Dollar as the US Dollar Index (DXY) bears attacked the 200-SMA. It should be noted that the hopes of witnessing a sooner end to the Israel-Hamas tussles and an absence of major casualties in the Middle East also challenged the previous energy supply crunch woes and exerted downside pressure on the crude oil price. Furthermore, China Premier Li cited fears of witnessing slower economic recovery and multiple challenges for the dragon nation, which in turn challenged the demand outlook for Oil and weighed on the black gold.

Although the US Dollar marked a corrective bounce so far in the day, the USDJPY failed to defend the latest rebound. In doing so, the Yen pair ignores the previous concerns dashing hopes of the BoJ’s rate hike in 2024. While ruling out late last week’s news suggesting the official announcement of an end to deflation in Tokyo, Japanese government ministers denied thinking of calling an end to such conditions and defended the Bank of Japan’s (BoJ) ultra-easy monetary policy.

Elsewhere, Atlanta Fed President Bostic pushed back the rate cut bias while saying, “There is no urgency to cut rates given the economy strength.” His hawkish comments failed to offer any new updates and kept the US Dollar pressured while helping the Treasury bond yields to rebound.

Earlier in the day, Aussie PMIs came in firmer while Japan inflation strengthened. That said, China Services PMI eased and so did India activity data for February. 

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

A busy day ahead…

Unlike Monday, the market volatility is likely to increase on Tuesday as a slew of data occupies the economic calendar. Among them, the final readings of February PMIs for major economies and the US ISM Services PMI will be crucial to observe. Also important will be the US Factory Orders and speeches from the second-tier Fed officials. Although the scheduled data could offer the US Dollar a chance to pare recent losses, the odds of witnessing the greenback’s stellar rebound are less ahead of Fed Chair Jerome Powell’s testimony and US employment reports.

May the trading luck be with you!