GBPUSD recovery fades after mixed UK employment report

After an upbeat start to the week, market players struggled for clear directions on early Tuesday. A lack of major data/events in Asia and mixed concerns about the region’s leading economies seemed to have probed the optimists. Adding strength to the cautious mood could be the anxiety ahead of this week’s top-tier data/events.

That said, GBPUSD fails to extend the week-start rebound amid mixed UK employment report while the US Dollar Index traces firmer yields to pare the previous day’s losses, the biggest in two weeks.

Further, EURUSD drops the most among the G10 currency pairs while Antipodeans edge lower. Additionally, Asia-Pacific equities trade mixed even after the positive performance of the Wall Street benchmarks.

The prices of Gold and crude oil faded the previous recovery momentum whereas BTCUSD and ETHUSD rallied amid optimism in the crypto markets.

Following are the latest moves of the key assets:

• Brent oil lacks upside momentum around $91.00 after refreshing the yearly high the previous day.
• Gold price prints mild losses near $1,925, retreating towards the 200-DMA support.
• USD Index picks up bids to reverse the previous day’s losses, the biggest in a fortnight, to around 104.80 by the press time.
• Wall Street closed with minor gains but the Asia-Pacific stocks edged lower. That said, equities in Europe and the UK trade mixed by the press time.
• BTCUSD and ETHUSD both print notable gains to reverse the previous day’s heavy losses to around $25,800 and $1,580 in that order.

Mixed markets are back in fashion…

Traders witnessed mixed economic signals from Australia, New Zealand, China and the UK during early Tuesday. The same joined the market’s reassessment of the previous optimism and cautious mood ahead of this week’s top-tier data/events to test the market players.

Australia’s Westpac Consumer Confidence deteriorated for September but NAB business sentiment data for August improved, which in turn puts a floor under the AUDUSD pair.

Further, the New Zealand Treasury forecasts easing in the unemployment conditions but failed to defend the NZDUSD amid pessimism surrounding China and hopes of witnessing the NZ budget surplus a year later than expected previously.

EURUSD keeps bearing the burden of downbeat ECB forecasts suggesting a sooner end to the rate hikes at the regional central bank. On the other hand, the GBPUSD dropped after the UK unemployment rate and employment change figures challenged the hawkish comments from BoE Official Catherine Mann.

It should be noted that the Japanese authorities’ efforts to tame the hawkish signals posted by BoJ Governor Kazuo Ueda the previous day seem to join the firmer yields and underpin the USDJPY recovery.

Moving on, the US Dollar recovers amid sluggish markets and prod the Gold, as well as the crude oil, buyers. However, the BTCUSD and ETHUSD mark a remarkable run-up as G20 leaders flash mostly friendly signals on the crypto regulations.

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

A few mid-tier data ahead but no clarity expected…

While the markets lost early-week optimism, the bears are yet to witness notable support and hence could check the Eurozone and German ZEW sentiment data, as well as the second-tier statistics from the US, to determine near-term directions. However, major attention will be given to the US inflation data, scheduled for Wednesday and Thursday’s European Central Bank (ECB) monetary policy meeting minutes for clear directions. Should the US inflation stay ‘sticky’, the latest concerns about the US soft-landing will gain major acceptance and can propel the US Dollar further. However, the ECB needs to hint at monetary easing in the future for the same.

May the trading luck be with you!