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MTrading Team • 2023-10-17

GBPUSD fades bounce off weekly low on downbeat UK wages, focus on US Retail Sales

GBPUSD fades bounce off weekly low on downbeat UK wages, focus on US Retail Sales

The risk appetite remains dicey as the US Treasury bond yields pick up bids amid mixed concerns about the Israel-Hamas conflict. That said, the US and Iran are likely to intervene in the Gaza war but talks of a humanitarian help to Gaza prod escalation of the geopolitical woes. Also, a Senior US General, Head of US CENTCOM, flew to Tel Aviv and showed support for Israel but the delay in ground operations by the Israeli military and talks of a ceasefire challenge the pessimists.

With this, the US Dollar pares the previous day’s losses and exerts downside pressure on the major currencies, commodities and Antipodeans. Also, the S&P500 Futures remain depressed while the Asia-Pacific shares edge higher by following the Wall Street benchmarks.

NZDUSD drops the most among major currencies on downbeat NZ inflation while GBPUSD occupies the second place as UK wage growth slows. Further, USDJPY traces firmer yields but the AUDUSD bucks the trend amid hawkish RBA Minutes.

Gold Price extends the previous day’s pullback from the monthly high whereas Crude Oil remains indecisive.

BTCUSD and ETHUSD print mild losses after the previous day’s heavy rise as market players dash a fake piece suggesting ETF approvals from the US SEC.

Following are the latest moves of the key assets:

  • Brent oil remains defensive around $90.50 after reversing from a two-week high the previous day.
  • Gold price drops for the second consecutive day, down 0.10% near $1,918 as we write.
  • USD Index reverses the previous day’s losses near 106.30 at the latest.
  • Wall Street closed with minor gains and the Asia-Pacific stocks edged higher. However, equities in Europe and the UK trade mixed at the latest.
  • BTCUSD and ETHUSD drop 1.0% each to around $28,200 and $1,580 as we write.
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Routine moves return…

Downbeat US NY Empire State Manufacturing Index joined cautious optimism to allow the US Dollar bulls to take a breather the previous day. However, the geopolitical fears and the firmer yields allowed the Greenback to register a fresh run-up even as Federal Reserve Bank of Philadelphia President Patrick Harker said that the interest rate hikes are likely over and he sees inflation ebbing. The USD’s run-up could also be linked to US Treasury Secretary Janet Yellen’s comments suggesting the US economy is in a good place.

On a different page, UK Average Earnings for August came in softer and joined downbeat comments from BOE chief economist, Huw Pill to recall the GBPUSD bears, following the previous day’s corrective bounce off the weekly low.

Russian President Vladimir Putin arrived in Beijing on Tuesday to meet China Communist Party Leader Xi Jinping and the same flagged market fears as the US isn’t in the good books of both these leaders. The same put a floor under the US Dollar and joined downbeat NZ inflation numbers to drown the NZDUSD. However, hawkish RBA Minutes and hopes of more stimulus from China allowed AUDUSD to remain firmer.

EURUSD remains pressured as markets await EU/German ZEW Sentiment figures and the US Retail Sales whereas the USDCAD prints minor gains ahead of Canadian inflation data. Further, Gold remains depressed as market players keep the US Dollar in good books while crude oil struggles to cheer geopolitical fears.

Elsewhere, the BTCUSD and ETHUSD rallied to refresh the monthly high late Monday but reversed afterward as the news suggesting approvals of the Bitcoin ETF appeared fake.

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

Too much data to watch…

EU/German ZEW sentiment figures will precede inflation data from Canada and the US Retail Sales to entertain the market players on Tuesday. However, major attention will be given to the geopolitical concerns and yields, which in turn are likely to keep the US Dollar on the front foot unless the data offers extreme disappointment.

May the trading luck be with you!