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MTrading Team • 2023-03-17

Gold rises towards yearly high amid downbeat US Dollar

Gold rises towards yearly high amid downbeat US Dollar

Market sentiment remains mildly positive as global policymakers and banks rushed to defend the banking system from the latest fallouts. Adding strength to the optimism could be the talks of China’s sustained recovery and challenges for further rate hikes.

The risk-on mood joined weaker US Treasury bond yields and the previous day’s mixed US data to weigh on the US Dollar.

With this, the AUDUSD leads G10 currency pairs while cheering the firmer risk profile, as well as the softer USD, whereas NZDUSD comes second in place as RBNZ rules out banking sector fears in New Zealand.

USDJPY also traces the yields and justifies the hedge fund’s bearish bias, as conveyed by Bloomberg, while USDCAD appears the last one to benefit from the US Dollar as Oil price struggle to defend the rebound from the multi-month low marked the previous day.

Gold braces for the biggest weekly gain since early November while Brent Oil posts a nearly 1.0% increase after falling to the lowest levels since December 2021 on Wednesday.

Further, BTCUSD remains firmer around the highest levels in nine months whereas the ETHUSD grinds higher as bulls approach the September 2022 peak.

Following are the latest moves of the key assets:

  • Brent oil regains $75.50 level during the two-day rebound from multi-month low.
  • Gold remains firmer for the third consecutive day, up 0.67% intraday near $1,931 at the latest.
  • USD Index extends the previous day’s fall towards retesting the 50-DMA support.
  • Wall Street closed with notable gains and so did equities in the Asia-Pacific region but shares in Europe and the UK printed mild gains of late.
  • BTCUSD and ETHUSD rise further to $26,100 and $1,720 in that order.
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Receding fears of the 2008 crisis favor optimists

With the decision-makers all in to push back the banking industry fears, the markets take a sigh of relief over the previous déjà vu of the 2008 crisis. Something fishy, however, could be deduced and probed by the optimists as the Fed allegedly holds information back on why the Silicon Valley Bank (SVB) ran out of liquidity. Traders fear that the same could poke the Fed’s hawkish bias in the next week’s FOMC and cut their Dollar longs while rushing for the Yen and Gold for more smart investments.

As a result, the Gold is up for the best week in many while the Crude Oil remains downbeat despite recovering from the multi-month low in the last two days.

AUDUSD cheers the headlines from China and broad US Dollar weakness, as well as upbeat jobs data at home, to remain buyer’s favorite while NZDUSD cheers easing concerns that the banks in New Zealand are the next to catch the fire.

GBPUSD also rises as Brexit optimism joins the likely end of the long labor strikes while EURUSD benefits from the hawkish ECB move.

Elsewhere, Cryptocurrencies are also on the positive side amid the US Dollar weakness and talks of the market suggesting more investment into the crypto field, as well as due to higher demand in Asia.

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

Final touches for the Fed eyed

Although the Fed is all set to announce a 0.25% rate hike, the latest banking crisis and doubts about the US central bank hiding something that caused the SVB fallout makes the next week’s FOMC important. As a result, traders will seek more clues to back their hawkish bias and hence today’s US Michigan Sentiment data, inflation expectations and industrial production become important to watch during a likely dull end to the volatile week.

May the trading luck be with you!