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MTrading Team • 2022-09-26

GBPUSD crash, fears from Russia propel risk-aversion, US dollar

GBPUSD crash, fears from Russia propel risk-aversion, US dollar

Cable’s slump to the all-time low joined the fears emanating from Russia’s warning to use nuclear weapons, if needed, to begin the trading week on a negative note. The risk-aversion also took clues from PBOC and BOJ updates, as well as the latest round of hawkish Fedspeak and firmer US data.

With this, the USD Index rallied to a fresh 20-year high and the yields also remained firmer. On the other hand, the Canadian dollar and prices of gold were the least affected while oil remained pressured amid feelings concerning the supply crunch and demand woes.

US Treasury yields reversed the previous day’s pullback from the multi-year high but USDJPY struggled to keep buyers hopeful as fears of BOJ meddling increased.

Cryptocurrencies portray the corrective bounce after the downbeat start of the week.

Following are the latest moves of the key assets:

  • Brent oil remains pressured at the lowest levels since January, down 1.60% on a day near $85.50 by the press time.
  • Gold rebounds from two-year low, up 0.10% intraday near $1,645 at the latest.
  • USD Index retreats to 113.30 after refreshing the multi-year high to 114.52 earlier in the day.
  • DAX, Eurostoxx and the FTSE are all printing mild losses as we write.
  • Wall Street closed in the red led by the Nasdaq’s 1.80% daily loss.
  • BTCUSD prints mild gains around $19,000 while ETHUSD struggles near $1,300.
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Disappointment over UK’s fiscal stimulus drowned GBPUSD

Although the UK’s new government announced plans to cut taxes, in addition to the energy bill caps, chatters fuelled by Britain’s opposition party that such measures are only for the rich drowned the GBPUSD on Monday towards the all-time low near 1.0340. The following rebound, however, remains halfway and might have taken clues from the BOE intervention talks.

Furthermore, the West is preparing more sanctions on Moscow amid fears that nuclear weapons are the next to be used in the Russia-Ukraine tussles. On the same line were grim comments from the central banks of China and the BOJ leader Haruhiko Kuroda.

The risk-aversion fanned the US dollar towards a fresh two-decade high before paring some gains. On the same line were the US Treasury yields. However, the prices of gold and the Loonie pair couldn’t properly portray the risk-aversion wave. Further, Brent oil refreshed its eight-month low but consolidated losses afterward, despite being in the red of late.

Elsewhere, BTCUSD and ETHUSD appear to hesitate in painting the market’s risk-off mood, as well as the US dollar strength, as both of them print mild gains around the recent lows.

⏫ 🟢 Strong buy: AUDUSD

⏬ 🔴 Strong sell: ETHUSD

⬆️ 🟢 Buy: USD Index, USDCAD, Nasdaq, USDJPY

⬇️ 🔴 Sell: DAX, FTSE 100, gold, BTCUSD

All eyes on BOE

The BOE intervention is looming and appears just around the corner as the cable refreshed all-time low, last marked in 1985, which in turn could propel the GBPUSD prices and may weigh on the US dollar. However, fears emanating from Russia and hawkish Fedspeak could keep King Dollar on the throne.

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