Markets turn dicey amid holiday season, covid woes but gold shines

Downbeat US data and FOMC Minutes allowed traders to brace for a positive week even as the coronavirus fears tried to tame the optimism. That said, a holiday-shortened week also benefited from the central bankers’ comments suggesting little aggression is hiking rates, as well as easing geopolitical fears surrounding Russia and China. Hence, the market is up for closing the week on a positive note amid light trading.

As a result, the US Dollar loses its shine and helps the Antipodeans, as well as commodities to recall the buyers, after witnessing losses in the last week. 

The same helped the gold buyers but crude oil braces for the third consecutive week despite the latest rebound. 

Among the major currency pairs, NZDUSD appears the biggest winner followed by the GBPUSD and the AUDUSD. Further, USDJPY also drowns as Japanese inflation came in stronger and pushes the BOJ to rethink its ultra-loose monetary policy.

BTCUSD and ETHUSD eye mild gains as traders lick FTX-led wounds while the softer US dollar pushes back the bears despite recent losses.

Following are the latest moves of the key assets:

• Brent oil extends the previous day’s gains but remains down for the third consecutive week around $86.30.
• Gold prints four-day uptrend near $1,758 by the press time.
• USD Index prints mild gains despite three-day losing streak.
• Wall Street closed with gains and appears helping stocks in Europe and London to please the bulls with a mildly positive start.
• BTCUSD and ETHUSD both snap three-day uptrend near $16,400 and $1,175 in that order.

Mild optimism stays

Receding fears of high rates and easing political pessimism keep traders optimistic as they prepare for the year-end celebration. It’s worth noting, though, that the actual action could take place during mid-December as traders brace for the Fed. In addition to the pre-Fed anxiety, coronavirus woes might also test the bulls, not to forget the RBNZ hawks and Taiwan-linked chatters.

All-in-all, mild optimism is likely to stay and can keep the traders directed towards riskier assets like the Dollars of New Zealand, Australia, Gold and equities. At the same time, the US Dollar may pare the biggest yearly gains since 2014. Elsewhere, US Treasury yields could stay firmer as bond traders rush for higher returns.

Cryptocurrencies haven’t been in good shape and are dropping as of late, despite bracing for the weekly gains. The reason could be linked to the FTX fiasco, as well as fears of more regulations. As a result, BTCUSD and ETHUSD are mildly positive.

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

Noting major to watch

While a light calendar and holiday season could restrict immediate market moves, mixed concerns surrounding the key central bankers’ next move also restrict the activity. Even so, the aforementioned catalysts of cautious optimism are likely to prevail, at least for now.

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