Hopes that central bankers will be able to tackle the inflation challenge helped Wall Street on Tuesday before multi-month high US Treasury yields raised doubts on the bullish bias. This in turn weighed on the European/UK markets amid mixed concerns and anxiety ahead of a speech from Fed Chair Jerome Powell.
Following the detailed performance report the key financial assets:
Oil prices regained as a divide among the European countries over Russian sanctions join the softer US dollar. However, gold failed to capitalize on the greenback’s weakness.
Antipodeans remained lackluster even as New Zealand eased covid-linked activity restrictions, mainly due to worsening coronavirus conditions in China and Europe. However, the Japanese yen dropped with global T-bonds, also due to the likely release of another stimulus in near future.
BTC/USD and ETH/USD consolidate recent gains amid sluggish trading momentum.
Given the latest challenges to sentiment and firmer yields, safe-haven assets are likely to gain more attention. However, a cautious mood limits the moves.
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⏬ 🔴 Strong sell: Brent oil, DOW JONES, S&P 500
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⬇️ 🔴 Sell: Gold, USD/JPY
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A smooth flow of hawkish Fedspeak kept fueling bond yields by the press time of the mid-European session on Wednesday. The bond rout also weighed on equities but couldn’t help the USD to rebound, nor does it propel gold prices, as traders eagerly await Fed Chairman Powell’s words, like he highlighted 50 basis points (bps) rate-hike calls during early-week speech.
Another city in China witnessed covid-led lockdown as daily infections mount. The virus conditions also worsen in Europe with a new variant called BA2 gaining momentum even as watchers are more interested in geopolitical headlines.
Energy prices cheered hopes of extended Russia-Ukraine tussles and softer USD while BTC/USD consolidates recent gains inside normal range despite the previous day’s fake breakout. Further, ETH/USD also prints the first daily loss in three as bulls celebrating higher burnout and upgrade news took a breather.
While today’s speech from Fed’s Powell will be crucial as bond bears await more good news, US readiness to sanction 300 Russian lawmakers and seize Moscow’s gold in Treasury will be challenged in Thursday’s NATO meeting, making it an interesting affair. Additionally, US Durable Goods Orders and first readings of March PMIs will be important as well.
That said, global financial markets are likely to remain more volatile in the upcoming weekdays, including for cryptos, as the key data/events lie ahead. As a result, it’s better to trade with caution, especially in riskier assets such as equities and Antipodeans. It’s worth noting, however, that BTC/USD and ETH/USD have their path to the north may be less hindered due to the latest acceptance after the Russia-Ukraine crisis.
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