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MTrading Team • 2023-08-16

Gold spooks bears as US Dollar eases ahead of FOMC Minutes

Gold spooks bears as US Dollar eases ahead of FOMC Minutes

Markets portray the typical pre-event consolidation on early Wednesday as markets await the Fed Minutes. With this, the previous pessimism fades and allowed the US Dollar bull to take a breather. The same put a floor under the Gold Price as it jostles with the 200-DMA at the lowest level in seven weeks.

That said, the NZDUSD rises the most even as the RBNZ keeps benchmark rates unchanged while the GBPUSD also fails to justify softer inflation numbers and extends the previous day’s recovery. Further, the EURUSD and AUDUSD also cheer the US Dollar’s retreat amid the hopes of China’s ability to tame recession woes, as well as the hopes that the ECB will be able to defend the hawks amid recently firmer data.

Even so, the crude oil fails to cheer the US Dollar’s weakness amid fears of receding demand. On the same line is the USDCHF pair that stays mostly unchanged while the USDCNY also remains mildly bid around the yearly high.

On the same line, BTCUSD and ETHUSD remain depressed as US SEC keeps hammering crypto traders’ optimism.

Following are the latest moves of the key assets:

  • Brent oil remains pressured during three-day downtrend, around $85.00 by the press time.
  • Gold price prints mild gains at the lowest level in seven weeks, close to $1,905 as we write.
  • USD Index retreats from 103.30 key resistance to print the first daily loss in four.
  • Wall Street benchmarks closed with losses but the stocks in the Asia-Pacific zone edged higher. That said, equities in Europe and UK print minor gains by the press time.
  • BTCUSD and ETHUSD print mild intraday losses to around $29,200 and $1,830 as we write.
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Traders pare recent moves after volatile day

After a slew of data/events, traders remain cautious and pare the previous day’s move while expecting a negative outcome for the US Dollar from today’s FOMC Minutes. Also likely to favor the market sentiment is the RBNZ’s inaction and softer UK inflation, which in turn challenge the hawkish central bank bias. Furthermore, a mildly positive outlook about Japan and the receding expectations of witnessing recession in China and Germany add strength to the mildly positive mood.

As a result, the riskier assets like equities, commodities and Antipodeans lick their wounds. However, the bullish bias is still in its nascent stage and hence traders should wait for the Fed Minutes for clear directions.

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

Fed bias is the key

While the US Industrial Production is also on the calendar, the major attention will be given to the Fed Minutes for the August meeting where the policymakers teased a halt of the tightening cycle. Should the details appear dismal and clearly show readiness on the part of the Fed hawks to fuel the benchmark rates one more time, the US Dollar can regain its upside momentum and weigh on the riskier assets.

May the trading luck be with you!