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MTrading Team • 2023-08-22

NZDUSD ignores dicey markets to recover from yearly low amid softer USD

NZDUSD ignores dicey markets to recover from yearly low amid softer USD

Markets remain lackluster as traders struggle between China-inflicted fears and multi-year high Treasury bond yields.

The risk appetite initially weakened amid doubts that Beijing’s repeated efforts to defend Yuan and bolster economic rebound may not be enough. Furthermore, S&P’s credit rating downgrade of mid-tier US banks and Taiwan stories added strength to the pessimism.

However, the concerns about the policy pivot at major central banks and the US Dollar’s pullback helped build the sentiment of late.

With this, the prices of NZDUSD jump the most among the G10 currency pairs as the Kiwi traders brace for Wednesday’s quarterly Retail Sales. AUDUSD follows the Kiwi bulls while GBPUSD, EURUSD and USDJPY all print around 0.30% intraday gains versus the Greenback by the press time.

Gold extends the previous day’s rebound from a five-month low but Brent Oil remains pressured amid fears of likely weakness in China’s energy demand.

Elsewhere, BTCUSD and ETHUSD fail to benefit from the softer US Dollar as fears of US SEC’s crackdown on the industry players join the concerns of smaller investible funds in the major economies to defend the crypto market.

Following are the latest moves of the key assets:

  • Brent oil remains pressured around $84.30 by the press time, extending previous day’s U-turn from one-week high.
  • Gold price picks up bids to regain $1,900, up 0.30% intraday at the latest.
  • USD Index drops to 103.00, down 0.30% intraday by the press time.
  • Wall Street benchmarks closed mixed and so did the stocks in the Asia-Pacific zone. That said, equities in Europe and UK print mild gains by the press time.
  • BTCUSD and ETHUSD hold lower grounds near $26,100 and $1,670 as we write.
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Sluggish markets in fashion

Traders remain in dilemma about China’s economic recovery, especially amid looming higher for longer rates, which in turn challenges the market sentiment even as the US Dollar’s retreat allows a sigh of relief to the riskier assets after the previous week’s fall toward the multi-month lows.

The market’s indecision also takes clues from the cautious mood ahead of the August 24-26 Jackson Hole Symposium event where the major central banks have historically shared critical details of their monetary policy moves.

Furthermore, a light calendar and previously mixed statistics also contribute to the lack of market precision. It’s worth noting that the banking market fears and hopes of economic recovery also confuse the market players. The same should renew the US Dollar’s run-up towards refreshing the yearly high. However, the lack of conviction among the market players checks the traders.

  • Strong buy: USDCAD
  • Strong sell: ETHUSD, GBPUSD, Gold
  • Buy: USD Index, Nasdaq, USDJPY

Second-tier data, Fed talks eyed

Moving on, traders will seek more clarity about the key risk catalysts like China, Fed and the banking sector. As a result, today’s US housing data, Fed talks and the market’s reaction to Fitch’s rating downgrade will provide fresh impulse. Following that, Wednesday’s top-tier PMIs will be the last stop before witnessing higher volatility backed by the Jackson Hole and US statistics.

May the trading luck be with you!