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Denis Sergienko • 2022-12-21

Markets turn risk-averse to consolidate BOJ-led moves, NZDUSD leads the bears

Markets turn risk-averse to consolidate BOJ-led moves, NZDUSD leads the bears

Global markets pare the Bank of Japan-linked moves during Wednesday’s sluggish start. However, the firmer Treasury bond yields and mixed headlines surrounding China portrayed the risk-off mood.

As a result, the US Dollar prints the first daily gain in three days whereas the Gold prints mild losses as it consolidates the biggest daily jump in three weeks.

Crude oil remains depressed as risk-aversion joins the US Dollar rebound and fresh fears of recession.

Elsewhere, NZDUSD dropped the most among the major currency pairs while USDCHF appears mostly unchanged while portraying the market sentiment.

Cryptocurrencies also drop as the mildly bid US Dollar joins mixed messages from the industry.

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Following are the latest moves of the key assets:

  • Brent oil drops for the second consecutive day, mildly offered near $80.00 at the latest.
  • Gold prints mild losses near $1,815 while paring the previous day’s gains.
  • USD Index prints the first daily gains in three around 104.00.
  • Wall Street closed with minor gains but stocks in the Asia-Pacific region, as well as in Europe and the UK, remain mixed, mostly down.
  • BTCUSD and ETHUSD remain depressed around $16,800 and $1,200 in that order.

Yields stay firmer despite market’s consolidation

Although traders lick BOJ-inflicted wounds, the bond rout continues during the inactive Wednesday. The reason could be linked to the hawkish central bank, firmer inflation and the BOJ’s readiness for further rate hikes. Also adding strength to the rush for risk-safety could be the headlines suggesting softer growth in China and downbeat activities in most of the Asia-Pacific region.

New Zealand’s trade deficit widened in November and joined the sour sentiment to drown NZDUSD whereas USDCHF remains mostly unchanged due to the Swiss Franc’s safe-haven appeal.

USDJPY stays sidelined with mild gains after falling the most in 24 years whereas Gold retreats on the US Dollar’s minor bounce. Crude oil remains pressured even as private inventories from the US shrank.

Moving on, BTCUSD and ETHUSD fade recent recovery move as mixed headlines surrounding NFTs and regulations of FTX fiasco-led moves challenge cautious optimism.

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

US Consumer Confidence data eyed

Looking forward, US Consumer Confidence data for December will be important to watch for intraday directions as the US Dollar recovers. However, major attention should be given to the risk catalysts and bond markets for clear directions.

May the trading luck be with you!