GBPUSD rises amid sluggish markets

Risk appetite improved during early Tuesday, after a sluggish start to the week, even as data from Japan, China and the UK failed to impress traders. Also likely to have challenged the market’s mood, but did not, were the covid woes in China and fears of global economic fears.

That said, an absence of major negative headlines from the G20 meeting and the Fed policymakers’ support for the 50 bps rate hike concerns seem to have favored the optimists of late.

It’s worth noting that the US Treasury yields faded during the week-start rebound and drowned the US dollar, which in turn propelled the Antipodeans and commodities. It’s worth noting that the UK’s mixed employment numbers failed to recall the GBPUSD bears while EURUSD cheers hawkish comments from the ECB policymakers.

AUDUSD and NZDUSD lead the G10 bulls whereas gold and crude grind higher amid a sluggish session.

Elsewhere, BTCUSD and ETHUSD remain firmer for the second consecutive day amid the crypto market’s consolidation despite fears of more regulations and disappointment from the FTX fiasco.

Following are the latest moves of the key assets:

• Brent oil licks its wounds near the one-week low, up 0.40% intraday around $93.80 as we write.
• Gold refreshes a three-month high near $1,780, up 0.50% at the latest.
• USD Index reverses the previous day’s gains and drops to the fresh low in three months around 106.10.
• Stocks in Europe and the UK are mildly bid but those from Germany print mild losses. Further, Wall Street snapped the winning streak.
• BTCUSD and ETHUSD rise for the second consecutive day, up nearly 2.0% around $1,270 and $16,850.

Risk sentiment improves ahead of key data

Although the qualitative catalysts were mixed, the market’s hopes of easy rate hikes enabled optimists to retake control after Monday’s absence. The latest risk-on mood could also be linked to the pre-data consolidation as the US PPI and Retail Sales are up for grabs.

GBPUSD and EURUSD had additional reasons in the form of the UK’s likely increase in minimum wage limit and the hawkish ECBSpeak to entertain the bulls. On the same line, downbeat Japanese GDP and sluggish yields allowed USDJPY to remain firmer.

Oil prices remained mildly bid as the US dollar weakness jostles with OPEC’s forecast of downbeat energy demand moving on. AUDUSD and NZDUSD are the leaders of optimists due to their riskier nature and the hopes for more stimulus from China.

That being said, the US stock futures and equities in Europe allowed risk-takers to keep the reins even as the yields and fears of a longer show surrounding the Russia-Ukraine tensions weighed on the market sentiment.

Elsewhere, the FTX fiasco and record outflow pushed US Treasury Secretary Janet Yellen to highlight challenges for the investment avenues, suggesting more regulations to land.

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

US PPI, risk catalysts are in the focus

Given the risk-on mood and hopes of easy rate hikes at the major central banks, as well as the G20 news, the markets are likely to remain firmer and can weigh on the USD. However, today’s US PPI and headlines from Russia, China will be crucial for short-term directions as the policymakers aren’t convinced of the pivot while the recession fears loom.

May the trading luck be with you!