Markets turn dicey amid recession fears, PMIs in the spotlight
Ever since Fed Chair Powell uttered the recession word, traders became anxious about today’s PMIs. The cautious mood joins a lack of major data/events ahead of the key activity numbers to portray the market’s inaction.
Even so, US Treasury yields remain and equities remain pressured. The US dollar, on the other hand, gains bids and drowned the Antipodeans, as well as commodities. However, USDJPY relied on Japanese bond market moves to resist a firmer greenback.
Crude oil prices remain depressed for the third consecutive day and the gold also dropped as a strong USD joined economic slowdown fears.
Major cryptocurrencies, namely BTCUSD and ETHUSD, consolidate recent moves amid sluggish markets.
Following are the latest moves of the key assets:
- Brent oil remains depressed around a five-week low, taking rounds to $110.00 at the latest.
- Gold also struggles for clear directions despite the latest downbeat performance near $1,830.
- USD Index regains upside momentum, snapping a three-day downtrend near 104.60.
- FTSE 100 drops 0.70% but DAX and STOXX50 are losing around 1.5% by the press time.
- Wall Street closed with mild losses on Wednesday.
- BTCUSD rises 2.8% as buyers aim to regain $20,500 while ETHUSD bulls flirt with $1,100, marking a 4.10% daily gain as we write.
Bears await confirmation from PMIs
Fed Chair Powell’s defense of the biggest rate hike since 1994 exerts downside pressure on the market sentiment, as expected. However, the US dollar bought some time before snapping the three-day downtrend.
Yields remained sluggish but equities were on the backfoot as market players fears economic slowdown and rushed towards the traditional safe-havens, namely the US dollar and yen. Fears of foreign bond buyers’ exit from the Japanese Treasuries offered additional strength to the JPY, which in turn weighed on the USDJPY prices. Alternatively, AUDUSD performed its role of risk barometer and lead the G10 losers even as Australia posted mixed PMIs for June.
The firmer USD and recession fears drowned the oil prices, as well as the gold, but failed to move a needle in the Chinese front where the dragon nation aims to achieve optimism GDP target.
BTCUSD and ETHUSD witness relief rallies as traders await confirmation of the latest pessimism.
⏫ 🟢 Strong buy: USDCAD
⏬ 🔴 Strong sell: Nasdaq, silver, ETHUSD, Brent oil
⬆️ 🟢 Buy: USD Index, USDJPY
⬇️ 🔴 Sell: DAX, FTSE 100, gold, BTCUSD
PMIs, Powell 2.0 eyed
The first readings of June’s activities in the US, the UK and Europe are the key to confirming the latest recession woes. However, those aren’t the only catalysts that need the trader’s attention as Fed Chair Powell’s second round of testimony and fears of gas shortage for Germany could also roil the mood.
Should the activity numbers print downbeat figures and Powell repeats the previous day’s commitments, the risk-aversion could intensify. As a result, the US dollar may extend the latest rebound.
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