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MTrading Team • 2023-07-25

Gold rebounds as China stimulus expectations join US Dollar pullback

Gold rebounds as China stimulus expectations join US Dollar pullback

The risk profile improves on early Tuesday as China stimulus expectations rise. Adding strength to the firmer sentiment are talks about the nearness to the major central banks’ policy pivot, as well as the market’s consolidation ahead of Wednesday’s Federal Reserve (Fed) monetary policy meeting decisions. It’s worth noting that a light calendar also allowed the US Dollar bulls to take a breather after a five-day uptrend.

The US Dollar’s retreat allowed commodities to pare recent losses while China-linked news provides an additional tailwind to the Antipodeans and prices of Gold, as well as crude oil. It’s worth noting that Gold print the first daily gains in five but Brent Oil struggles amid fears of more supplies, as well as due to the downbeat PMIs flashed the previous day.

That said, AUDUSD justifies its risk barometer status to lead the G10 currencies versus the US Dollar whereas USDCAD remains lackluster due to the Oil’s inability to cheer the US Dollar’s pullback.

Elsewhere, BTCUSD and ETHUSD fail to cheer the softer US Dollar while licking their wounds at the lowest levels in five and three weeks respectively, marked the previous day, as pessimism in the crypto market grows.

Following are the latest moves of the key assets:

  • Brent oil stays defensive near $82.50 after rising to three-month high.
  • Gold price prints the first daily gains in five around $1,965 by the press time.
  • USD Index retreats from a two-week high to 101.30 at the latest.
  • Wall Street benchmarks closed positive and so do stocks in the Asia-Pacific zone. That said, equities in Europe and UK edge higher of late.
  • BTCUSD and ETHUSD print minor losses around $29,100 and $1,850 after a slump to multi-day lows.
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Risk-on mood propels Gold price, weighs on USD

The week-start downbeat PMIs bolstered hopes of witnessing a sooner end to the rate hike trajectory and favored sentiment on Monday. The optimism gained support from talks of China’s more stimulus and efforts to defend the Yuan. The same joined downbeat US PMIs to weigh on the US Dollar while the riskier assets, mainly the commodities and Antipodeans, reverse the last week’s losses.

Apart from China news and central bank concerns, a lack of major data/events also allowed risk-takers to get the pass on Tuesday. Furthermore, the pre-Fed consolidation of the markets also allows traders to pare the latest moves.

Talking about cryptos, IMF’s worries about Bitcoin’s legal tender status and a pullback in the World Coins weigh on the BTCUSD and ETHUSD prices of late.

  • Strong buy: USDCAD
  • Strong sell: ETHUSD, GBPUSD, Gold
  • Buy: USD Index, Nasdaq, USDJPY

Mid-tier data from Germany, US to entertain traders

Having witnessed upbeat early hours of the day, market players may face challenges as sentiment data from Germany and the US occupy the comparatively lighter economic calendar. That said, firmer prints of the scheduled data may allow the greenback to regain the upside momentum and better brace for the Fed while any more data-disappoint will keep the Gold and commodities on the front foot. Above all, pre-Fed anxiety could restrict the market moves.

May the trading luck be with you!