Risk profile improves amid a sluggish week-start, GBPUSD cheers change in policy, diplomats

Global markets portray cautious optimism after a volatile week that ended with a firmer US dollar. The mildly optimistic moves weigh on the greenback amid a lack of major data/events. However, expectations of economic slowdown and central banks’ aggression put a floor under the USD.

Policymakers in Japan hint at meddling while those from China silently act. Further, easing fears of the UK market’s collapse underpinned the GBPUSD while other pairs cheered the softer US dollar amid an inactive week-start.

Oil has its reason to print a 1.0% upside while gold also extends the bounce from short-term key support.

Cryptocurrencies pare weekly losses amid hopes positive trading environment, and more instruments.

Following are the latest moves of the key assets:

• Brent oil regains $93.00 as it rises around 1.0% by the press time.
• Gold extends the week-start rebound to $1,655, up 0.70% intraday of late.
• USD Index pares Friday’s gains near 113.00, down 0.30% on the day as we write.
• FTSE gains over 1.0% while Eurostoxx and DAX are both up nearly 0.50% intraday at the latest.
• Wall Street closed in the red led by Nasdaq’s 3.08% downside on the day.
• BTCUSD prints mild gains around $19,300 whereas ETHUSD regains $1,315, up 0.60% by the press time.

Nothing major

China’s Annual Communist Party Conference allowed President Xi Jinping to reiterate hike zero-covid plans. On the same side were Xi’s plans to defend the dragon nation’s control in Taiwan and Hong Kong. Even so, hopes of further stimulus and Chinese banks’ rollover of contracts to safeguard the CNY restricted the market’s pessimism.

UK’s newly appointed Chancellor Jeremy Hunt seems to get a warm welcome due to his political reputation and tune-in with the other diplomats, which in turn raised hopes of overcoming the recession woes in Britain and favored the sentiment.

Also, an absence of the money market’s wagers for the 1.0% Fed rate hike in November joins a light calendar to weigh on the US Dollar, and Treasury yields and favor the risk profile.

Alternatively, IMF’s Gita Gopinath favored hawks at the Fed and the ECB while Japan's PM showed readiness to defend JPY and begin the search for BOJ Governor Kuroda’s replacement.

It should be noted that the OPEC+ members’ criticism of the US push for supply cuts seemed to have favored the oil prices.

Elsewhere, chatters over pan-Asia cryptocurrency, the introduction of a facility to buy Bitcoin from a direct bank account favored the BTCUSD and ETHUSD buyers.

⏫ 🟢 Strong buy: USDJPY

⏬ 🔴 Strong sell: ETHUSD

⬆️ 🟢 Buy: USD Index, USDCAD, Nasdaq, EURUSD

⬇️ 🔴 Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

A light calendar ahead

This week appears to be a sluggish one for the US dollar and hence the latest pullback lasts a bit longer. However, hopes from China and the UK shouldn’t fade quickly else the risk-off will highlight the economic fears and propel the greenback.

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