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MTrading Team • 2022-05-02

Gold, USD seesaw amid pre-Fed jitters, BTC, ETH rebound

Gold, USD seesaw amid pre-Fed jitters, BTC, ETH rebound

Global markets begin the key week with a risk-off mood as traders’ anxiety weighs on sentiment. Adding to the risk-aversion were headlines from Beijing and Russia, not to forget the IMF’s downbeat growth forecasts for the Asia-Pacific region.

The US dollar, thus, benefits from its safe-haven appeal, which in turn weighs on commodities and Antipodeans during the early Monday. However, cryptocurrencies consolidate recent losses after a lackluster weekend.

It’s worth noting that stocks in Asia and Europe remain pressured while tracking Friday’s losses on Wall Street. The Treasury yields, however, stay firmer around a multi-month high on fears of faster rate hikes by the key central banks, including the Fed, RBA and the BOE.

Following is the list of major assets’ latest performances:

  • Brent oil extends the previous day’s pullback moves to $104.50, down 2.0% of late.
  • Gold snaps two-day rebound to drop back towards the 100-DMA support near $1,880.
  • USD Index regains the 103.00 level, up 0.15% on a day.
  • FTSE 100 print mild gains while DAX and EUROSTOXX50 drop around 1.0% and 2.0% respectively.
  • Dow Jones and S&P 500 dropped 2.77% and 3.63% but Nasdaq slumped 4.17% on Amazon rout.
  • BTCUSD and ETHUSD both gain around 1.0% intraday at the latest but stays pressured near $39,000 and $2,850 of late.
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USD attracts bids as pre-Fed anxiety, geopolitics and covid woes favor safe-haven demand

US Dollar Index (DXY) reverses Friday’s pullback from a 20-year high as risk-averse traders seek solace in the greenback amid hawkish hopes from the Fed. The greenback’s run-up challenged the corrective pullback of gold and oil prices even as fears concerning energy supply tried to defend the Brent oil buyers.

Other than the hopes of faster rate hikes and balance-sheet normalization, the USD also cheered harsh virus-led activity measures in China and Russia’s aggressive invasion of Ukraine’s Mariupol. Also helping the greenback were firmer US Treasury yields.

Elsewhere, BTCUSD and ETHUSD consolidate the losses made since early March within a known range surrounding $39,000 and $3,000.

⏫ 🟢 Strong buy: USDJPY, GBPUSD

⏬ 🔴 Strong sell: Nasdaq, silver, AUDUSD

⬆️ 🟢 Buy: USD Index, DOW JONES, S&P 500

⬇️ 🔴 Sell: DAX, FTSE 100, brent oil, gold, ETH/USD, BTC/USD, USD Index

PMIs will direct intraday moves but FOMC is the key

Moving on, traders will keep their eyes on the global central bankers’ fight against inflation for near-term directions. Also important will be Friday’s US Nonfarm Payrolls (NFP) and the monthly PMIs for April, among which the US and Canada are up for release details on Monday.

Should the central banks dial back easy money policies, the US dollar has further room on the upside, which in turn may weigh on the gold and commodities. However, the downside for gold remains limited amid inflation woes and its traditional risk-safety status.

On the other hand, cryptos are likely witnessing a bearish grind as traders lose confidence in the once top-notch investments of late.

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