Growth fears, pre-NFP woes weigh on sentiment, crude oil plummets

News Wrap 02/06

Traders took a sigh of relief after the US dollar’s biggest daily jump in a month fades during early Thursday, thanks to a pullback in yields. Even so, concerns surrounding global growth and hawkish Fedspeak joined risk-negative headlines from China to weigh on the mood.

With this, the USD Index (DXY) pares weekly gains and underpins corrective pullbacks in commodities, as well as Antipodeans.

Gold stretched the previous day’s rebound but Brent oil drops for the third consecutive day, eyeing the first weekly loss in three.

USDCHF gained the most due to the greenback’s weakness, as well as strong inflation data from Switzerland. EURUSD and GBPUSD were also more or less in the same line as chatters over faster rate hikes by the ECB and the BOE grow louder.

Cryptocurrencies consolidate the recent losses but remain pressured by looming concerns over regulations and risk appetite.

Following is the list of major assets’ latest performances:

  • Brent oil stays pressured near one-week low, down 1.5% around $113.80.
  • Gold approaches $1,855 hurdle during the second positive day.
  • USD Index snaps two-day rebound, down 0.30% near 102.3.
  • FTSE 100 remains indecisive while EUROSTOXX50 and DAX print mild gains.
  • Nasdaq and S&P 500 both dropped around 0.70% while Dow Jones slipped 0.54% on Wednesday.
  • BTCUSD and ETHUSD add around half a percent while taking rounds to $29,900 and $1,830 of late.

Indecision among traders prevails ahead of key data

Although Fed’s Beige Book and comments from policymakers renew recession fears, recently firmer US data battled the bears during a mixed Thursday.

Additionally weighing on the market sentiment is the anxiety ahead of the US ADP Employment Change and NFP, as well as anti-trade headlines from China relating to the US, Australia and Taiwan.

The risk-off mood could be seen in lighter shades as yields ease. Even so, the equities fail to convince the bulls.

USD drops as the market’s indecision directs risk-averse traders toward gold, which in turn helped AUDUSD. However, oil prices remain on the back foot as Saudi Arabia eyes an increase in output due to Russia’s inability to comply with OPEC+ rules due to the Western sanctions.

BTCUSD pares the biggest loss in three weeks while ETHUSD snaps a three-day downtrend with mild gains. It should be noted that both the crypto leaders remain around familiar levels despite the recent volatility.

⏫ 🟢 Strong buy: USDCAD, USDCHF and USDCNY

⏬ 🔴 Strong sell: Nasdaq, silver, ETHUSD

⬆️ 🟢 Buy: USD Index, USDJPY

⬇️ 🔴 Sell: DAX, FTSE 100, brent oil, gold, BTCUSD

US employment figures are crucial to watch

Global traders keep their eyes on Thursday’s early signal for NFP, namely ADP Employment Change, amid hopes of a firmer number. Should the actual outcome disappoints, the US dollar pullback can extend. However, fears of global growth may test the greenback sellers.

Elsewhere, speculations over fresh US-China tussles and tighter monetary policies across the board could keep the risk appetite compressed, which in turn might restrict the likely gains of gold, equities and cryptocurrencies.

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