Crude Oil renews yearly high as demand-supply plays join US Dollar’s retreat

Monday appears quiet during the Asian session as Japan’s holiday joins a light calendar elsewhere and the market’s cautious mood ahead of this week’s top-tier central bank events, as well as the key activity data for September.

The market’s consolidation allows the US Dollar bulls to take a breather after a nine-week uptrend, which in turn helps the commodities and Antipodeans to extend Friday’s corrective bounce. Adding strength to the positive sentiment could be the hopes for China’s steady economic recovery, especially after last week’s upbeat data dump.

Elsewhere, Gold Price cheers the sluggish US Dollar to poke the key upside hurdle while the crude oil refreshed yearly high on the fronts, namely the WTI and Brent.

It should be noted that the equities in the Asia-Pacific zone trade mixed with a slightly positive bias and underpin the optimism surrounding commodities. That said, EURUSD and GBPUSD struggle to defend the previous day’s rebound amid anxiety ahead of the Fed and BoE monetary policy announcements, as well as the PMIs.

Moving on, cryptocurrencies edge higher amid a slightly softer US Dollar and expectations that the big buyers are already stockpiling the BTCUSD and ETHUSD amid hopes of a positive response to the spot ETFs, which are in the pipeline.

Following are the latest moves of the key assets:

• Brent oil remains firmer at the yearly high, despite retreating to $94.80 by the press time.
• Gold price prints a three-day winning streak of around $1,927 as we write.
• USD Index stays defensive around 105.30 after retreating from a six-month high the previous day.
• Wall Street closed with losses but the Asia-Pacific stocks edged higher. That said, equities in Europe and the UK are also edging higher by the press time.
• BTCUSD and ETHUSD print mild gains around $26,600 and $1,630 as we write.

A quiet start to the key week…

Apart from Japan’s off and an absence of major data/events, not to forget the cautious mood ahead of this week’s top-tier catalysts, a mixed play of economic signals also tested the US Dollar buyers on early Monday.

Among them, concerns that the US is sneaking into the disinflationary environment joined the fears of geopolitical tension in China also prod the market players. Furthermore, the chatters of more pain for China housing market watchers and doubts about the Dragon Nation’s ability to defend the economic recovery from COVID-19 also challenge the latest optimism, which in turn puts a floor under the US Dollar.

However, the OPEC supply cuts and expectations of more energy demand from China, as well as from Europe, keep the energy buyers hopeful. Also favoring the Oil buyers are the talks about the likely deficit in the commodity’s demand-supply matrix as major energy suppliers stay ready to extend the output cut policy well beyond 2023 and the US Strategic Petroleum Reserves (SPR) exhausts faster.

EURUSD fails to defend the gains amid the ECB’s dovish hike while the GBPUSD bulls also hesitate as fears of UK recession supersede the hawkish concerns about the BoE. Even so, the NZDUSD leads the G10 gainers amid softer US Dollar and mostly positive China concerns while ignoring economic fears surrounding New Zealand.

On a different page, Gold and equities join the cryptocurrencies to edge higher amid cautious optimism during a sluggish start of the key week.

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

Second-tier catalysts eyed…

Although an absence of major data/events could keep troubling the momentum traders on early Monday, the inflation clues from Canada will join the ECB Officials’ speeches and Germany’s monthly economic report could entertain the market players. That said, a slightly positive performance of yields may challenge the intraday sellers of the US Dollar and can stop the Gold buyers around the multi-day-old falling resistance line.

May the trading luck be with you!