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MTrading Team • 2023-07-27

Crude oil pokes multi-day high as US dollar fails to justify Fed moves, China data improves

Crude oil pokes multi-day high as US dollar fails to justify Fed moves, China data improves

Fed’s matching of the market’s expectations supersede Chairman Powell’s rejections of policy pivot, as well as hints for September rate hikes, which in turn allowed markets to remain optimistic and weigh on the US Dollar during late Wednesday, as well as early Thursday.

Adding to the firmer sentiment could be China's industrial profits and talks that the ECB and BoJ will also join the Fed and are likely to favor policy doves sooner or later.

With the softer US Dollar and cautious optimism ahead of ECB, US GDP, Antipodeans and commodities were firmer while USDJPY struggles amid illiquid bond markets, as well as due to pre-BoJ anxiety.

That said, Gold rises for the third consecutive day whereas Brent Oil prints the biggest daily gains in three, so far, as it pokes the highest level since late April marked earlier in the week.

Elsewhere, BTCUSD and ETHUSD print a three-day uptrend despite posting minor gains amid looming fears of harsh US regulations over trading safety concerns.

Following are the latest moves of the key assets:

  • Brent oil rises more than half a percent to $83.30 as it pokes multi-day peak of late.
  • Gold price prints three-day uptrend as bulls flirt with $1,980-85 resistance zone by the press time.
  • USD Index drops for the third consecutive day to refresh weekly low near 100.65, down 0.35% on a day by the press time.
  • Wall Street benchmarks closed mixed but stocks in the Asia-Pacific zone edged higher. That said, equities in Europe and UK trade mildly bid of late.
  • BTCUSD and ETHUSD print minor gains around $29,400 and $1,870 after a slump to multi-day lows.
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Fed discreetly confirms policy pivot and lets markets be happy

Fed announced a 0.25% rate hike and showed readiness for higher rates if the inflation fails to ease, marking the “meeting by meeting” approach. Also, the policymakers’ struggle to suggest higher rates past 2023 and the absence of clear rejections of rate cuts in late future favor sentiment. Additionally, China marked improvements in industrial profits and repeated the previous stimulus hints to add strength to the risk-on mood.

Elsewhere, market players do anticipate ECB to follow the Fed’s footsteps and with the likely easier US GDP numbers, the US Dollar drops for the third consecutive day and lifts the commodities and major currencies.

In addition to the aforementioned catalysts, a likely decline in Russian Oil output and US crude oil inventory draw add strength to the black gold price.

It should be noted that the equities in the Asia-Pacific and the US stock futures remained firmer during early Thursday, allowing the European and British shares to begin the day on a firmer footing. However, the fears of harsh regulations prod BTCUSD and ETHUSD buyers of late.

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

ECB, US GDP and one busier day…

Having witnessed the Fed-induced volatility, the market players will keep their eyes on the ECB announcements, advance readings of US Q2 GDP and the US Durable Goods Orders for June. Additionally, US Initial Jobless Claims and the mid-tier housing data, as well as inflation clues, will also populate the calendar and make traders busier. It should be noted that the ECB’s failure to please hawks, despite announcing the widely expected 0.25% rate hike, could allow the US Dollar to pare recent losses.

May the trading luck be with you!