Multiple catalysts intensify risk-aversion, strong USD weigh on gold but BTC, ETH lick their wounds

Having witnessed a mildly positive week-start, global markets turned risk-off mode active on Tuesday, slowing down a bit during the initial Wednesday, on multiple challenges to sentiment.

Be it fears of escalating tensions between Russia and the West or the Moscow-Kyiv tussles, not to forget covid woes in China and central bankers’ rush towards tighter monetary policies, everything contributed to the previous day’s heavy risk-off mood. The bears, however, seem to catch a breather during Wednesday but aren’t yet off the board.

The worsening mood drowned Wall Street shares but Asia-Pacific markets seem a little reserved. On the same line were European equities while the US Dollar cheers flight to safety.

Moving on, gold prices remain pressured and Brent oil defends the $100.00 threshold. However, BTCUSD and ETHUSD consolidate recent losses around the lowest levels in more than a month.

Given the lighter calendar in the US, speech from ECB President Christine Lagarde and Bank of Canada Governor Tiff Macklem will be in focus for the near-term direction. Even so, the aforementioned risk catalysts will keep the driver’s seat.

Following is the list of major assets’ latest performances:

• Brent oil extends the previous day’s rebound, by rising 0.50% intraday near $106.00.
• Gold remains pressured around $1,900, down 0.25% by the press time.
• The USD Index prints five-day uptrend while poking the March 2020 highs around 102.60.
• FTSE 100 rises 0.40% but DAX and EUROSTOXX50 drop nearly 2.0% and 1.0% in that order.
• Dow Jones and S&P 500 declined 2.4% and 2.8%, Nasdaq slumped around 4.0%.
• BTCUSD rise 1.8% to $38,800 but ETHUSD declines 2.4% to $2,875.

Risk-aversion at full steam

Not only Russia’s rejection of peace talks and hint at nuclear war but rising covid cases inside China and the major central bankers’ hurry to tame inflation also contributed to Tuesday’s heavy risk-off. Adding to the negative catalysts were comments from major analysts and global institutions, including the IMF, which raised concerns over global economic growth.

As a result, US equities saw the sea of red with losses ranging between 2.0% and 4.0% while the USD Index (DXY) refreshed a two-year high above 102.00. The same compressed gold prices and other counter-greenback assets like BTCUSD and ETHUSD. It’s worth noting that prices of crude oil improved amid fears of supply disruption but failed to stop USDCAD from joining the league of the EURUSD and the GBPUSD which made larger losses.

Talking about the US data, Durable Goods Orders and Consumer Confidence both helped the USD to stay firmer at the multi-month high. However, the AUDUSD rebounds as strong Australian inflation data fuelled RBA rate-hike bets during early Wednesday.

The leading cryptocurrencies also lick their wounds at multi-day bottoms by printing smaller gains of late as markets await the US Q1 2022 GDP and further Fedspeak, not to forget updates from Russia.

⏫ 🟢 Strong buy: USDJPY

⏬ 🔴 Strong sell: Nasdaq

⬆️ 🟢 Buy: USD Index, USDCAD

⬇️ 🔴 Sell: DOW JONES, S&P 500, DAX, FTSE 100, brent oil, silver, gold, ETH/USD, BTC/USD

ECB’s Lagarde, BOC’s Macklem in focus

Other than the above-mentioned risk catalysts, today’s speech from ECB’s Lagarde will also be crucial for the EURUSD traders as the major currency pair trades near the lowest levels since 2017.

Additionally, BOC’s Macklem and Rogers both will also be eyed for near-term USDCAD direction as the pair renews a six-week high.

Elsewhere, qualitative risk catalysts will be of major attention and can move the markets more rapidly.

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