Gold reverses pullback within bullish chart formation, focus on US PPI, Jobless data

The risk complex remains unclear early Thursday, after a volatile day, as the Eid holidays in major parts of Asia join a cautious mood ahead of the European Central Bank’s (ECB) Interest Rate Decision. With this, the US Dollar pares the biggest daily jump in 13 months while allowing the commodities and Antipodeans to lick their wounds amid a sluggish start of the key day.

That said, the US Dollar Index (DXY) marked the biggest daily jump since March 2023 after the US inflation and Fed Minutes bolstered the odds of witnessing delays in the Federal Reserve’s (Fed) rate cut. Also favoring the Greenback were the geopolitical woes surrounding China, Russia, and the Middle East.

While the US Dollar rallied, the EURUSD remained on the back foot amid the dovish concerns about the ECB. Further, GBPUSD also ignored hawkish comments from the Bank of England (BoE) policymaker to slump while USDJPY jumped to the highest levels since 1990 amid the dovish bias about the Bank of Japan (BoJ).

That said, China’s downbeat inflation data failed to challenge a corrective bounce in the Antipodeans and the commodities, after a heavy fall, whereas USDCAD remains on the front foot despite upbeat Oil prices amid the Bank of Canada’s (BoC) dovish halt. Moving on, Gold price retreated from an all-time high, before posting a small recovery, as the market’s cautious mood joins hopes of witnessing lower rates outside the US.

Talking about cryptocurrencies, BTCUSD and ETHUSD ignored upbeat US Dollar strength to bounce off the weekly low, grinding higher of late, amid optimism about the Bitcoin halving and spot ETF approvals for Ethereum.

Following are the latest moves of the key assets:

• Brent oil fades the previous day’s rebound from the weekly low, around $90.80 at the latest.
• Gold price seesaws around $2,335 as bulls seek more clues to retake control after reversing from an all-time high.
• The USD Index grinds higher past 105.00, mildly bid at the five-month high as we write.
• Wall Street closed in the red while the Asia-Pacific stocks edged lower despite a thin presence. Further, European and UK shares print minor losses during the initial trading hour.
• BTCUSD and ETHUSD both extend the previous day’s rebound with mild gains to around $70,700 and $3,580 at the latest.

US Dollar bulls take a breather after a rally…

Upbeat prints of the US Consumer Price Index (CPI), Core CPI, and Atlanta Federal Reserve’s Sticky Price CPI for March pushed back the odds of a sooner rate cut from the Fed. The hawkish bias also gained support from Minutes of the latest Federal Open Market Committee (FOMC) Monetary Policy Meeting and propelled the US Dollar. It’s worth noting that the Wall Street Journal’s (WSJ) Fed watcher Nick Timiraos said late Wednesday that Fed rate cuts are Now a Matter of if, not just when. On the same line, Goldman Sachs also pushed back the Fed rate cut call to July from June whereas US President Joe Biden said, “Inflation news may delay rate cut but we will have a cut before year-end.”

Apart from the Fed concerns, backed by the US inflation data and FOMC Minutes, geopolitical headlines surrounding the Middle East, China, and Russia also soured the sentiment and allowed the US Dollar to rise. That said, the US and Japan joined hands to battle with the Russia-China ties. On the other hand, Israel prepares for Iranian attacks and so does the US CENTCOM Commander, which in turn fuels the market’s fears of an energy supply crunch and helped the Oil price to remain firmer despite a heavy build in the weekly US Crude Oil inventories.

It should be noted that the dovish concerns about the ECB and unimpressive data from the bloc joined the broad-based US Dollar rally to drown the EURUSD, especially when the markets prepare for today’s ECB Interest Rate Decision. Further, USDJPY also rallied to the highest level since 1990 due to the contrasting views about the Fed and the BoJ. However, policymakers portrayed a verbal intervention to drag the Yen pair down from a multi-year high early Thursday.

GBPUSD dropped the most in six months despite hawkish comments from BoE policymaker Megan Greene. On late Wednesday, BoE’s Greene said, “Inflation persistence is a greater threat in the UK than the US.”

Moving on, USDCAD rallied the most since early February despite strong Oil prices as the Bank of Canada (BoC) left benchmark interest rates unchanged but sounded dovish.

Given the overall US Dollar strength, the Gold price also retreated from the record high marked the previous day before bouncing off within a fortnight-old bullish channel early Thursday. It’s worth observing that the XAUUSD’s rebound lacks momentum amid downbeat inflation data from China, one of the world’s top Gold customers. However, the Asian Development Bank (ADB) revises up China’s economic forecast for 2024 and allows commodities, as well as Antipodeans, to pare the previous day’s fall.

• Strong buy: USDCAD, USDJPY, US Dollar
• Strong sell: AUDUSD, NZDUSD, GBPUSD
• Buy: BTCUSD, ETHUSD, Nasdaq, Gold
• Sell: DAX, FTSE 100, BTCUSD, EURUSD

All eyes on ECB, US data…

Looking ahead, monetary policy announcements from the ECB will be a crucial event for traders even as the market chatters confirm a dovish halt of the region’s central bank. The reason could be linked to ECB President Christine Lagarde’s resistance to accepting the early rate cuts, which if uttered with widely anticipated no rate actions, could allow the EURUSD pair to extend early-day rebound from a five-month-old support of 1.0730.

Even so, the US Producers Price Index (PPI) for March and weekly Jobless Claims will play an important role in determining the short-term market momentum and can challenge the riskier assets if posting strong positive outcomes.

May the trading luck be with you!