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MTrading Team • 2023-09-05

Crude oil retreats from yearly top as sentiment dwindles after long weekend in US

Crude oil retreats from yearly top as sentiment dwindles after long weekend in US

The risk profile fails to justify China’s efforts to defend the economic recovery, as well as positive news from Country Garden, as the US traders return to their desks after a long weekend. The sour sentiment could be linked to the indecision about the Fed’s next move after Friday’s upbeat NFP and hawkish comments from the policymakers. Also keeping the market players on edge are the mixed concerns about the US-China ties and the West versus Russia tensions.

With this, the US Dollar Index rises to a fresh high in two months while tracing the upbeat Treasury bond yields and weighing on the commodities, as well as Antipodeans.

It’s worth noting that the RBA’s inaction exerted additional downside pressure on the AUDUSD pair, apart from the broadly firmer USD, which in turn drowns it to post more than 1.0% intraday loss at the latest. On the same line is the 1.0% fall of the NZDUSD pair while the USDCAD manages to rise half a percent at the latest.

Further, Gold Price remains pressured for the fourth consecutive day while Crude oil reverses from the Year-To-Date (YTD) top.

Elsewhere, cryptocurrencies also print losses as market players track futures contracts to expect further downside of the BTCUSD and ETHUSD amid probable hardships from the US SEC.

Following are the latest moves of the key assets:

  • Brent oil retreats from the yearly high to print mild losses around $88.60 by the press time.
  • Gold price prints minor losses during the four-day losing streak to around $1,936 at the latest.
  • USD Index approaches May’s peak by crossing the key resistance line to poke 104.50 level as we write.
  • Asia-Pacific stocks edged lower while equities in Europe and the UK remain depressed by the press time.
  • BTCUSD stays pressured at around $25,700 while ETHUSD drops to $1,620 at the latest.
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China fails to defend risk-on mood as US traders return…

Although policymakers in China keep rolling ways to defend the economic recovery, market players appear less convinced and rather consider the Dragon Nation’s efforts as desperate. Not only the Chinese officials but also the headlines suggesting no default risk from Beijing’s biggest real-estate company Country Garden also lacks short of infusing the risk-on mood.

The reason could be linked to the fresh hawkish concerns about the Fed, especially after the recent firmer US NFP allowed the policymakers to keep the rates higher for longer if not managing another rate lift.

Elsewhere, mixed data from the Eurozone and the UK also confuse the traders and hence they resort to the US Dollar amid firmer yields.

Additionally, geopolitical concerns and natural calamities are extra incentives for risk-averse traders to prefer the Greenback and consolidate recent gains from Crude Oil.

On a different page, fears that Bitcoin and Ethereum have a further downside to track seem to weigh on the BTCUSD and ETHUSD amid a broadly firmer US Dollar.

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

An active day ahead…

As the US traders are back after the long weekend and the economic calendar also has some interesting details to watch, markets will be more volatile than on Monday. Among the key catalysts, ECB President Christine Lagarde’s speech, Eurozone PPI and the US Factory Orders will gain major attention, not to forget the final prints of the UK PMIs for August. Given the likely active day and the US Dollar’s recent run-up, the risk aversion may amplify should the scheduled factors favor the Greenback.

May the trading luck be with you!