Risk profile improves amid sluggish session, China’s holiday

Global markets portray cautious optimism during the sluggish start to the week comprising the US inflation and other consumer-linked data. China’s holidays add strength to the market’s inaction while a light calendar elsewhere also contributes to the softer moves.

Even so, the US dollar remains pressured and helps the other to keep the previous week’s corrective pullback. The yields, however, remain firmer and put USDJPY on the front foot.

More importantly, GBPUSD led the bulls despite mixed UK data while NZDUSD also ignored downbeat NZIER economic forecasts.

Prices of gold and crude oil remained strong but not as firmer as silver which rallied around 1.75% intraday at the latest.

Elsewhere, BTCUSD refreshed a three-week high but ETHUSD extends Friday’s pullback amid fears surrounding Ethereum’s Merge.

Following are the latest moves of the key assets:

• Brent oil prints three-day uptrend as bulls pokes $94.00 by the press time.
• Gold extends Friday’s run-up to $1,725, up 0.45% intraday
• USD Index drops to fresh two-week low, down 1.0% around 108.00 at the latest.
• DAX rises 1.20% while Eurostoxx and FTSE are both in the positive territory with 0.70% and 0.55% intraday gains as we write.
• Wall Street remained firmer with Nasdaq’s 2.11% daily gains leading the bulls.
• BTCUSD renews three-week high during six-day uptrend, up 1.75% near $22,200 but ETHUSD drops 0.50% near $1,740 by the press time.

Markets brace for key data/events

With the light calendar, off in China and no major macros, Monday appeared a quiet day that allowed traders to extend the last week’s consolidation forward. In doing so, the hopes of more stimulus battle with the fears of hawkish monetary policy actions and geopolitical/trade-related woes linked to Russia and China.

The last round of Fed policymakers’ speeches ahead of the 15-day silence from the September FOMC favored further rate hikes. Their ECB counterparts also suggested tighter monetary policy despite geopolitical tension and the energy crisis. It’s worth mentioning that the latest rebound in the bloc’s economics seemed to have also contributed to the market’s optimism.

Even so, the Sino-American tussles could well inflate the US dollar but a quiet day didn’t allow the greenback to recover. The same propelled XAUUSD and oil prices but prices of silver and other base metals led the bullish move.

On the other hand, fears that Ethereum’s Merge lacks cyber security jostle with hopes that the BTCUSD is good for a long at the 2022 cycle low seemed to have confused crypto traders.

• Strong buy: AUDUSD
• Strong sell: ETHUSD
• Buy: USD Index, USDCAD, Nasdaq, USDJPY
• Sell: DAX, FTSE 100, gold, BTCUSD

Nothing major on the cards

The global economic calendar remains light ahead of Tuesday’s US inflation data and hence the traders could witness further grinding. However, the risk-on mood is likely to have a short life considering the ongoing Russia-Ukraine tension and the US-China chatters. Also, the looming energy crisis in the Eurozone and hawkish central bankers should provide extra strain on the market.

May the trading luck be with you!