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MTrading Team • 2023-07-05

Oil buyers struggle on China, growth concerns ahead of FOMC meeting minutes

Oil buyers struggle on China, growth concerns ahead of FOMC meeting minutes

The risk appetite soars on full markets as fears of recession join the escalation of the US-China trade war tactics. Additionally, likely higher rates from the key central bankers, despite downbeat data, push some government authorities, like in Japan and China, to defend the domestic currencies.

As a result, the US Dollar grinds higher and the riskier assets like commodities and Antipodeans remain pressured, despite paring losses of late.

That said, the Gold Price prints the first daily loss in five while Brent oil consolidates the previous day’s heavy gains. It’s worth noting that EURUSD leads the buyers while USDCAD occupies the other end as markets await Fed Minutes.

Elsewhere, BTCUSD and ETHUSD seek fresh clues after teasing crypto bears the previous day.

Following are the latest moves of the key assets:

  • Brent oil prints mild losses below $76.00 by the press time, paring the biggest daily gain in a week.
  • Gold price also struggle around the two-month-old resistance, near $1,925 at the latest.
  • USD Index grinds higher after two-day winning streak, close to 103.10 as we write.
  • Asia-Pacific shares edged lower whereas equities in Europe and UK are downbeat of late.
  • BTCUSD and ETHUSD print minor losses to around $30,800 and $1,940 by the press time.
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Risk aversion seeks acceptance

While the new rounds of trade curbs are on the wires from the US and China, Russian PM Vladimir Putin’s global recession forecast seems to gain accolades. The same joins downbeat China PMI and the PBoC’s failed attempts to defend the CNY, as well as the JPY defense by Japan authorities, market sentiment worsens. Additionally, the US Treasury bond yields mark the widest inversion in 40+ years and amplify the economic woes.

On a different page, higher central bank rates and softer data from mostly top-tier economies also raise concerns that the global economy inches closer to recession should more restrictive policies prevail longer.

It should be noted that the cautious mood ahead of today’s US FOMC Meeting Minutes and the return of the full markets, after Tuesday’s US holiday, also contribute towards the risk-off mood and put a floor under the US Dollar, while also weighing on the prices of Gold and Crude Oil. It’s worth observing that Saudi Arabia and Russia’s favor for more supply cuts fail to defend the energy buyers.

On the other hand, market analysts warn against investing in cryptos and trigger a pullback in prices of the BTCUSD and ETHUSD. Also challenging the crypto enthusiast are the threats of heavy regulations and a fall in NFTs.

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

Mid-tier EU data, Fed Minutes in focus

While the market players are all in for the minutes of June FOMC, EU PPI and the final readings of the PMIs from the Eurozone, as well as from the UK, may also entertain the traders amid recession woes. Should the Fed Minutes fail to suggest more rate hikes, the risk-aversion may ease and can weigh on the US Dollar prices.

May the trading luck be with you!