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MTrading Team • 2022-12-08

Crude oil recovers from yearly low as supply crunch fears contrast with demand hopes

Crude oil recovers from yearly low as supply crunch fears contrast with demand hopes

Global markets remain dicey during early Thursday as recession woes and Russia-linked fears battle the receding pessimism surrounding China’s zero-covid policy. 

The US Dollar Index struggles for clear directions after reversing from the weekly top the previous day while Treasury bonds take a breather following Wednesday’s rally. 

With this, crude oil gains 1.0% while paring the weekly losses around the yearly low whereas gold stays sidelined after rising in the last two days.

AUDUSD and NZDUSD cheer China-inspired optimism but the rest of the major pairs remain indecisive.

Cryptocurrencies are also pressured around the weekly low, licking their wounds after the previous day’s heavy fall.

Following are the latest moves of the key assets:

  • Brent oil bounces off yearly low, gains 1.0% around $78.50.
  • Gold probes two-day uptrend around $1,786.
  • USD Index remains pressured around 105.00 after reversing from weekly high.
  • Wall Street closed mixed and so do the stocks in Europe and the UK.
  • BTCUSD prints mild losses around $16,800 whereas ETHUSD stays defensive near $1,230.
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Pre-Fed inaction keeps grinding markets

Although many catalysts stay ready to roll the trading decisions, the momentum appears less interesting as market players await the next week’s FOMC. Even so, Russia’s uttering of “nuclear weapons” join the rate hike trajectory by major central banks to highlight the fears. On the contrary, China and Hong Kong announced more measures to ease the virus policy.

Elsewhere, the US Dollar traced a recovery in the bond yields and ignored softer job-related data to defend the first weekly gain in three, which in turn probed the commodity and Antipodeans. However, fears of a supply crunch from Russia and expectations of higher demand from China allowed Crude oil buyers to lick their wounds at the yearly low.

With this, AUDUSD and NZDUSD lead the currency bulls while the rest appeared lackluster heading into another likely inactive session.

Cryptocurrencies failed to portray any clear directions amid looming regulatory fears and downbeat activity data.

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

Nothing major on the cards

Looking forward, a speech from ECB President Christine Lagarde and weekly US Jobless Claims may offer directives to the market players. However, the pre-Fed anxiety and a lack of top-tier catalysts, as well as mixed signals from the qualitative factors, keep the traders on thin ice before the all-important second week of December.

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