Global markets turn dicey after a stormy week filled with multiple central bank announcements, top-tier data and banking rout. Policymakers tried their hands to placate market fears of another financial crisis by announcing dovish rate hikes and opening the valve for US Dollar liquidity. However, traders seem to remain unconvinced and keep piling on bonds and yen for risk safety.
The latest moves appear quite contrasting as some of the key decision makers hint at tough regulations of the market and showed readiness for more defense of banks while the economics state the need for higher rates. Also teasing the policy hawks is the banking turmoil’s run on the US balance sheet as it reverses the Fed’s effort to tame the amount via higher rates.
With this, the Treasury bond yields remain pressured and the US Dollar pares some of its latest losses, which in turn weigh on the Gold price. However, the momentum remains calm amid a cautious mood ahead of the final shot of the week, namely the key PMIs and US Durable Goods Orders.
USDJPY becomes the top loser while EURUSD, GBPUSD and USDCAD struggle for clear directions.
Further, BTCUSD and ETHUSD also pare weekly gains around the multi-day tops as crypto markets flash mixed signals.
Following are the latest moves of the key assets:
Although Fed, BoE and SNB announced rate hikes, all of them were worried about the bank crisis and teased policy pivot. The same joined the comments from international regulatory body officials favoring the tough regulations for the financial markets to weigh on the sentiment. Further, US Treasury Department keeps lauding their success in restricting further banking rout even if the markets don’t believe it.
On the other hand, the latest figures from the US, Europe and the UK have been impressive and suggest further inflation pressure, which requires more rate hikes.
As a result, the traders remain cautious and rush towards the bonds, as well as the JPY while trying to park a part of the risk on the Gold but staying away from the US Dollar.
Earlier in the day, Aussie PMI data arrived downbeat but the UK Retail Sales marked notable improvement.
As a result, the USDJPY lures bears and the AUDUSD pushes back the downside bias whereas prices of Gold pare recent gains. However, Crude Oil regains upside momentum on the sluggish US Dollar.
It should be noted that the optimism surrounding the US regulation, with a fresh positive proposal, joins the options market’s mood, to keep BTCUSD and ETHUSD buyers hopeful despite the latest retreat in prices.
Moving on, the markets are likely to witness a sluggish end of the active week but surprises from the PMIs and US Durable Goods Orders won’t be taken lightly. Also important to watch will be the comments from central bankers and regulatory authorities, as well as Treasury officials, for clear directions.
May the trading luck be with you!