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MTrading Team • 2023-09-20

GBPUSD drops to 16-week low amid downbeat UK inflation, Fed eyed

GBPUSD drops to 16-week low amid downbeat UK inflation, Fed eyed

The pre-Fed anxiety joins China-inflicted woes to portray the risk-off mood on early Wednesday. That said, the UK’s downbeat UK inflation data and firmer German PPI fail to offer any clear directions to the traders amid fears of higher rates and softer economic growth outside the US.

With this, the US Dollar Index traces the firmer yields to defend the previous day’s recovery, despite lacking upside momentum of late.

GBPUSD drops the most among the G10 currency pairs while AUDUSD, NZDUSD and the USDCAD struggle for clear directions.

Crude Oil extends the previous day’s pullback from the yearly high while posting the biggest daily loss in a month while Gold Price also drops for the second consecutive day.

The Asia-Pacific shares track Wall Street benchmarks by edging lower but the European and the British equities print mild gains by the press time.

BTCUSD and ETHUSD print mild losses while snapping a two-day winning streak as data about crypto whales disappoint while US SEC targets more firms for investigations.

Following are the latest moves of the key assets:

  • Brent oil drops more than 1.00% intraday during the two-day losing streak to around $93.60 by the press time.
  • Gold price also extends the previous day’s losses near $1,930, down 0.10% intraday at the latest.
  • USD Index stays defensive around 105.15 after snapping two-day losing streak the previous day.
  • Wall Street closed with minor losses and the Asia-Pacific stocks edged lower. That said, equities in Europe and the UK edged higher at the latest.
  • BTCUSD and ETHUSD print mild losses to around $27,100 and $1,630 as we write.
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Troubled markets ahead of FOMC

US housing data failed to push back the worries about the world’s biggest economy but US Treasury Secretary Janet Yellen keeps expecting soft-landing, which in turn joins stronger inflation clues to defend the Fed hawks and underpin the US Dollar strength.

It should be noted that the China state planner NDRC communication of the economic hardships and the People’s Bank of China’s (PBoC) status quo add strength to the risk aversion, even as the hopes of more stimulus from Beijing prod the pessimists.

On a different page, the UK released inflation data for August and offered more proof of the British economic hardships. However, Germany’s firmer PPI for the said month failed to inspire the Euro buyers as early signals for the bloc’s economic growth have been dismal.

Elsewhere, the US SEC eyes more probes on the major crypto firms like Coinbase and Binance while the data about the crypto whales suggest heavy liquidation of the BTCUSD and ETHUSD.

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

All eyes are on the Fed

Although some second-tier data from the West may entertain traders, major attention will be given to the Fed announcements. While the no rate change is almost given, the dot-plot, economic forecasts and Powell’s speech are the key to watch for clear directions. A hawkish halt is more likely and can renew the US Dollar’s strength, which in turn will weigh on the riskier assets and commodities.

May the trading luck be with you!