Traders are on their toes on a data-full day, recently entertained by the UK employment report. Adding to the market’s anxiety could be the mixed concerns about the Fed’s next move as the latest economics have been unclear while Powell sounded hawkish. Additionally, fresh geopolitical fears and China’s role exert extra pressure on the momentum traders.
It’s worth noting that the US Dollar traces the slightly downbeat yields ahead of a slew of data from the Eurozone and the US while commodities and Antipodeans extend Friday’s recovery moves. That said, the Gold price struggles within a short-term bearish channel but the Oil price lacks upside momentum.
Elsewhere, Wall Street closed mixed and so did the Asia-Pacific shares but the US stock futures remain mildly bid and allow the EURUSD to edge higher of late. Further, GBPUSD cheers upbeat UK jobs report and sloppy USD while USDJPY and USDCHF remain illiquid of late.
AUDUSD fails to justify the hawkish defense of the RBA officials and China comments while USDCAD also rises amid softer crude oil, Canada’s main export item.
On a different page, BTCUSD and ETHUSD recovered after easing from the multi-month high in the last week, mainly due to the optimism surrounding the spot ETF approvals.
Following are the latest moves of the key assets:
On Monday, the US Dollar eased as mixed economics joined the market’s reaction to Friday’s Moody’s move to shift the US rating to a negative outlook. Also, the New York Federal Reserve reported a modest dip in Inflation expectations, as well as a stable labor market and household finances. However, the Philadelphia Fed Survey signaled higher growth, job gains and inflation in 2023 and 2024. Elsewhere, US Treasury Secretary Janet Yellen marked disagreement with Moody's decision to move the US rating to a negative outlook. US Diplomat Yellen also added that higher interest rates would create a challenge to debt sustainability if they last.
On the other hand, China’s Finance Minister Lan Fo'an said that the economy to maintain an upward trend in the fourth quarter (Q4) and prod the US Dollar bulls. It’s worth noting, however, that the news suggesting Hamas using a hospital and hostages as human shields and that it also consumes the fuel sent for civilians via the same method amplified fears of Israel’s intense response and put a floor under the Greenback.
Moving on, the mixed tone of the European Central Bank (ECB) officials put a floor under the US Dollar, mainly as Fed Chair Powell appeared hawkish in his latest appearance. That said, Vice President Luis de Guindos cited data dependency while trying to push back the rate-cut bias of the market. On the same line, ECB Governing Council Member and Bank of Latvia Governor Martins Kazaks mentioned that (It’s) too soon to say that the terminal rate has been reached.
Furthermore, crude oil remains pressured as the Organization of the Petroleum Exporting Countries (OPEC) said that oil market fundamentals remain strong and dismissed recent negative opinions.
Additionally, Reserve Bank of Australia (RBA) Assistant Governor (Economic) Marion Kohler ruled out market concerns that the Aussie central bank is nearing the policy pivot while saying that the decline in Australian inflation is slower than previously forecast. The policymaker also stated that there is no doubt that interest rates are restrictive. It should be observed that the Bank of England (BoE) policymaker Catherine L Mann cited research points to signal increased inflation, increased inflation persistence, and increased inflation volatility associated with climate shocks, policies, and spillovers.
Amid these plays, market players remain unclear of the major central bankers’ next move and rather want to wait for more data to take the next move, which in turn intensifies the market’s inaction.
Looking ahead, the first readings of the Eurozone growth figures and the monthly Consumer Price Index (CPI) from the US will be important to watch among other scheduled statistics. Should the bloc report downbeat growth and the US CPI remain firmer, the odds of witnessing a fresh EURUSD fall and an overall US Dollar recovery can’t be ruled out, which in turn will weigh on the prices of commodities and Antipodeans.
May the trading luck be with you!