Gold advances towards multi-month high with eyes on US inflation, FOMC Minutes

Markets turn dicey even as the US Dollar extends previous losses ahead of the top-tier data and events. Apart from pre-catalyst anxiety, the cautious optimism also takes clues from upbeat headlines surrounding China, as well as from hopes of witnessing softer inflation.

That said, the Fed policymakers propel odds of witnessing easy inflation, which in turn weighs on the hawkish bets for the May-month rate hike and the US Dollar. It should be noted that the greenback’s weakness ignores slightly positive Treasury bond yields, as well as chatters of easy global growth.

With the US Dollar's weakness joining the firmer sentiment about China's growth, the Gold price rise for the second consecutive day while approaching the key upside resistance near $2,040. Crude Oil also remains firmer while rising to the highest levels in a week.

Even so, the USDCAD pair fails to cheer the firmer Oil price, as well as the downbeat USD, as traders remain cautious ahead of the Bank of Canada (BoC) monetary policy meeting. Among the other major currency pair, NZDUSD leads the gainers against the US Dollar while the EURUSD comes in second place. The rest portrays the pre-data anxiety at its best.

Equities in Asia-Pacific also trade mixed while tracing Wall Street but shares in Europe and the UK appear to lack clear directions.

Cryptocurrencies fail to cheer the US Dollar's weakness as BTCUSD and ETHUSD both pare recent gains around multi-month highs.

Following are the latest moves of the key assets:

• Brent oil rises for the second consecutive day to around $86.00 at the latest.
• Gold also prints two-day winning streak as bulls poke $2,020 as we write.
• USD Index drops to 102.00 by the press time.
• Wall Street closed mixed and so did equities in the Asia-Pacific region. However, shares in Europe and the UK seem slightly positive during the initial hour.
• BTCUSD and ETHUSD print mild losses near $30,100 and $1,870 at the latest.

Sluggish markets fail to defend US Dollar

Trades keenly await the US CPI and Fed Minutes after witnessing mixed signals from the policymakers, mostly downbeat. The pre-data caution joins the IMF’s statements suggesting easy inflation, confirmed by the Fed talks, and weighs on the US Dollar. Adding to that are hopes of China’s faster recovery, which in turn allowed Gold buyers to remain on the top despite indecisive moves everywhere else. Furthermore, Oil prices also please energy bulls as the said catalysts join OPEC+ supply cuts.

That said, USDCAD struggles to keep bears on the table despite firmer Oil prices and easy USD as BoC is likely to announce a dovish status quo of the policy. On the other hand, the RBA’s policymaker Bullock’s hawkish comments fail to impress AUDUSD traders. 

On the different page, expectations of China’s active role in Bitcoin allowed the BTCUSD to cross the $30,000 mark but a cautious mood afterward prod the traders of late. On the same line, ETHUSD also prints mild losses as markets await the hard fork update.

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

US inflation, BoC and Fed Minutes are the key

While there are other second-tier factors to watch from the Eurozone India and the UK, markets will pay attention to the US CPI for March, the Bank of Canada (BoC) monetary policy report and the FOMC Minutes to overcome the latest indecision. Should the US inflation surprises to the upside and the Fed policymakers appear hawkish from the Minutes, the BoC’s inaction may recall the USDCAD bulls via the firmer US Dollar.

May the trading luck be with you!