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MTrading Team • 2024-03-11

Crude Oil stays depressed amid China, central bank concerns

Crude Oil stays depressed amid China, central bank concerns

The global financial markets remain dicey early Monday, after witnessing a heavy run-off against the US Dollar and a favorable week for the Gold. That said, the Greenback bears the burden of the trader’s peace with June rate cuts from major central banks, as well as the mixed US employment report.

While the US Dollar Index marked the biggest weekly loss of the year, Gold prices reached a record high. However, crude oil remains pressured amid demand fears from China and supply concerns from the producers outside OPEC+.

Elsewhere, EURUSD seesaws at the highest level in two months while GBPUSD edges higher at the yearly top. Further, USDJPY holds lower grounds after falling the most on a week in eight months. It’s worth noting that AUDUSD and NZDUSD retreated from monthly highs amid mixed signals from China whereas USDCAD extended recovery from a five-week low on softer crude oil and downbeat Canada job signals.

On a different page, BTCUSD refreshes a record high near $70,000 whereas ETHUSD seesaws around an all-time high amid optimism of the crypto traders.

Following are the latest moves of the key assets:

  • Brent oil remains pressured at the lowest level in two weeks, around $82.50 by the press time.
  • Gold price seesaws at the highest level on record, making rounds to $2,180 of late.
  • USD Index licks its wounds at two-month low, hovering around 102.75 as we write.
  • Wall Street closed with minor losses while the Asia-Pacific stocks edged lower. Further, the shares in Europe and the UK remain depressed during the initial hour.
  • BTCUSD and ETHUSD both print notable gains around $70,500 and $3,960 while flirting with multi-year highs.
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Crude oil fails to cheer downbeat US Dollar amid demand-supply concerns…

The US Dollar Index (DXY) failed to cheer upbeat prints of US Nonfarm Payrolls (NFP) as an increase in the Unemployment Rate and softer wage growth favored the need for the US central bank’s exit from restrictive monetary policy. On the same line could be Fed Chair Powell’s testimony that reiterated the June rate cut and drowned the Greenback. Not only Fed’s Powell but other policymakers like New York Fed President John Williams also teased the start of rate reductions in 2024.

That said, the US Dollar’s weakness could be cited as the key catalyst for the Gold price upside whereas upbeat prints of China inflation and hopes of stimulus also favored the XAUUSD bulls. China’s headline inflation per the Consumer Price Index (CPI) also reported the first YoY increase since August 2023 and helped the Gold buyers to keep the reins at the record high. However, the technical resistance and downbeat Producer Price Index (PPI) from the dragon nation join the pre-data anxiety to test the XAUUSD buyers of late.

It should be noted, however, that a fall in China’s oil imports during January-February and news suggesting an increase in the Oil output from outside OPEC+, led by the US, weighed on the energy benchmark.

On a different page, most European Central Bank (ECB) officials suggest a June rate cut and hence EURUSD remains firmer even as some doubt the April deadline is the start of the monetary policy consolidation. On the other hand, GBPUSD remains comparatively stronger as the Bank of England (BoE) officials push back concerns of rate cuts and the UK budget appears to favor more UK demand.

Additionally, USDJPY bears the burden of the hawkish concerns about the Bank of Japan (BoJ). Spring wage negotiations could help determine the next week’s BoJ moves, making them the key to observe for the USDJPY traders as the Yen pair seesaws at the lowest level in five weeks after the biggest weekly loss in eight months. Also highlighting the pair is the weekend news suggesting the BoJ’s likely dumping of the Yield Curve Control (YCC) policy.

Talking about cryptos, a heavy inflow of funds and positioning for Bitcoin halving event join optimism about the spot ETF approvals to keep the BTCUSD and ETHUSD firmer.

  • Strong buy: USDCAD, USDJPY
  • Strong sell: Crude Oil, US Dollar, GBPUSD
  • Buy: BTCUSD, ETHUSD, Nasdaq, Gold

A likely sluggish start to the key week…

A lack of major catalysts will restrict the market’s moves on Monday. However, a two-week blackout period for the Federal Reserve (Fed) officials ahead of March 20 FOMC highlights this week’s US consumer-centric data, mainly the headline Consumer Price Index (CPI), Retail Sales and the University of Michigan’s (UoM) Consumer Confidence figures. Also important to watch will be the UK jobs report and second-tier data from Europe and Canada.

May the trading luck be with you!