GBPUSD drops on unimpressive UK employment data, risk aversion

Market sentiment worsens on early Tuesday, following an upbeat week-start, as traders brace for the US debt ceiling talks. The risk appetite also bears the burden of downbeat China data and fears of recession. The downbeat mood fails to underpin US Treasury yields and the US Dollar amid demand for the bond.

With this, the AUDUSD justifies its risk-barometer status, backed by the RBA’s downbeat monetary policy minutes, whereas the GBPUSD follows the trend amid softer-than-expected UK employment numbers. Further, USDJPY traces downbeat bond coupons and cheers softer US data while EURUSD edges higher on hopes of upbeat EU growth statistics.

Prices of Gold and Crude Oil both retreat amid the market’s cautious mood, as well as fears of less demand amid economic woes.

Cryptocurrencies grind higher as markets slip into consolidation mode and the fears of harsh regulations ease.

Following are the latest moves of the key assets:

• Brent oil remains pressured after bouncing off the previous day, down 0.10% near $75.60 at the latest.
• Gold price reverses the first daily gains in four near $2,010.
• USD Index drops for the second consecutive day, mildly offered near 102.30.
• Wall Street closed with mild gains but the Asia-Pacific shares grind lower. However, equities in Europe and the UK print mild gains as we write.
• BTCUSD and ETHUSD rise for the third consecutive day to $27,200 and $1,820 by the press time.

Fears, anxiety not helping USD

Although the sentiment worsens and the Fed policymakers defend hawkish moves, the US Dollar remains pressured amid recently downbeat data, as well as hopes that the US diplomats won’t take the risk of US default even at the cost of their public promises.

UK jobs report fails to justify comments suggesting more inflation pressure and higher rates from BoE’s economist Pill, which in turn lures GBPUSD bears. On the other hand, RBA Minutes failed to defend the hawkish surprise and joined downbeat China data to weigh on the AUDUSD.

Gold price drops on the market’s lack of interest in any other assets than the bonds, as well as caution ahead of the US debt ceiling talks. Furthermore, crude oil fails to benefit from the supply crunch woes and likely crude oil demand from the US.

Additionally, BTCUSD and ETHUSD print a three-day uptrend as traders seek solace in cryptocurrencies amid hopes of easier US regulations and more demand, not to forget the frequent upgrades.

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

EU Q1 GDP, US Retail Sales and debt ceiling negotiations in focus

Moving on, a busy day awaits the trader’s fraternity as the first readings of the EU Q1 GDP precede the US Retail Sales for April and the debt ceiling talks. Also important are the Canada inflation data and Fed talks, not to forget frequent speeches from the ECB policymakers. Hence, markets may witness volatility and the same can help the traditional safe havens like the US Dollar, Gold, yen and CHF. However, a positive surprise can allow the US Dollar to extend the latest fall while offering the much-needed run-up in the Gold price.

May the trading luck be with you!