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MTrading Team • 2023-06-26

Oil price edges lower despite geopolitical fears emanating from Russia, mixed China news

Oil price edges lower despite geopolitical fears emanating from Russia, mixed China news

Risk appetite turns sour on early Monday amid disturbing headlines from Russia. Adding strength to the downbeat mood are chatters about China’s fading economic recovery versus the nation’s readiness for more stimulus.

With this, the US Dollar remains on the back foot but prices of Gold improve whereas Crude Oil stays pressured even as fears of supply crunch join hopes of higher energy demand.

That said, yields exert downside pressure on USDJPY while EURUSD stays sidelined amid a cautious mood ahead of the ECB President Christine Lagarde’s speech.

NZDUSD leads the G10 gainers from the softer USD whereas AUDUSD justifies sour sentiment and occupies the other end. It should be noted that fears about China's economic recovery weigh on Yuan even as the dragon nation shows readiness to ward off the recession woes.

Elsewhere, cryptocurrencies pare recent gains around monthly highs as the market’s downbeat mood prods BTCUSD and ETHUSD bulls despite heavy ETF spree.

Following are the latest moves of the key assets:

  • Brent oil reverses the previous day’s bounce off two-week low near $74.00 at the latest.
  • Gold price extends recovery from the lowest level in three months to $1,930 by the press time.
  • USD Index prints the first daily loss in three around 102.70 as we write.
  • Wall Street closed with losses whereas Asia-Pacific shares edged lower. That said, equities in Europe and UK are on the downside to begin the trading day.
  • BTCUSD and ETHUSD print mild losses around $30,300 and $1,890 to reverse the previous day’s pullback from the monthly high.
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Russia, China weigh on sentiment

Although the Wagner mercenary group dropped its Moscow mutiny, it was a clear challenge to Russian President Vladimir Putin and the same raised geopolitical fears that Putin won’t forget it. On the same line were S&P’s downward revision to China growth forecasts and updates from Beijing suggesting strong stimulus to defend the economy from slipping into recession woes.

On the other hand, mixed US PMIs prod US Dollar buyers but the Gold, bond, CHF and JPY cheer their traditional haven status. It should be noted that the Asia-Pacific equities were mostly downbeat but the S&P500 Futures began the week slightly positive before printing minor losses at the latest.

Cryptocurrencies are struggling to defend the latest gains as positives of having more ETFs rolling in contrast with the looming regulatory fears.

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

Central bankers, second-tier data in focus

While ECB President Christine Lagarde’s speech and German sentiment numbers are the first ones to entertain market players, second-tier US data may also lengthen the watchers’ list. Above all, risks catalysts like geopolitical headlines surrounding Russia and China’s economic slowdown should gain major attention.

May the trading luck be with you!