Upbeat sentiment exerts additional downside pressure on USD, oil rallies ahead of EU meeting

Downbeat figures of the US inflation and growth numbers renewed market optimism during early Monday. The risk-on mood also took clues from China and was defended amid the US bank holiday. 

Upbeat sentiment drowned the US Dollar Index (DXY) and underpinned commodities, as well as Antipodeans. The same helped gold prices to extend Friday’s recovery and propel Brent oil prices to a nine-week high.

NZDUSD appears the biggest gainer among the G10 currency pairs while USDCHF stands on the other hand, mainly due to downbeat Swiss data.

Cryptocurrencies tracked equities and mark the biggest daily gains in over a week, not to forget to mention the three-day uptrend.

Following is the list of major assets’ latest performances:

• Brent oil rises for the eighth consecutive day to poke late March’s top around $120.
• Gold rises for the second consecutive day to poke $1,860.
• USD Index remains on the back foot around five-week low, down 0.10% near 101.50 by the press time.
• FTSE 100 rises 0.30% while DAX adds near 1.0% and EUROSTOXX50 jumps more than 1.30% at the latest.
• Dow Jones rose 1.80% but S&P 500 rose near 2.5% to print the biggest weekly gains in 1.5 years. Further, Nasdaq rallied over 3.3% on Friday.
• BTCUSD and ETHUSD both gain around 5.0% each while regaining the $30,000 and $1,900 levels to post the biggest daily gains in eight days.

Risk-on or just consolidation?

Global markets cheered receding odds of the Fed’s faster rate hikes after the recent US PCE Price Index and GDP numbers eased. Adding to the optimism is China’s gradual reopening of the economy after the covid-led restrictions. However, the European Union’s (EU) readiness for more sanctions on Russia and Moscow’s refrain from stepping back in its invasion of Ukraine challenge the bulls.

The firmer sentiment pushed the DXY further south and flash afresh monthly low, which in turn allowed riskier assets to extend the previous week’s recovery moves.

In addition to the firmer risk appetite and downbeat USD, oil buyers have an additional advantage in the form of geopolitical challenges to the supplies emanating from Europe’s likely sanctions and the latest Russian tussles with Ukraine in Donbas.

Above all, BTCUSD and ETHUSD gained the most while tracking Friday’s equity gains and softer US dollar, as well as market chatters of a short-term bottom.

⏫ 🟢 Strong buy: USDCAD, USDRUB and USDCNY

⏬ 🔴 Strong sell: Nasdaq, silver, ETHUSD

⬆️ 🟢 Buy: USD Index, USDJPY

⬇️ 🔴 Sell: DAX, FTSE 100, brent oil, gold, BTCUSD

Light calendar to start a busy week

With the US bankers cheering a long weekend, Monday is likely to be a dull day. Though, updates from the Eurogroup meeting and China may entertain traders. Also important for the day will be German inflation numbers and the Eurozone Consumer Confidence.

The risk-on mood is likely to extend amid a lack of major catalysts and the recent doubts about the Fed’s 50 bps rate hikes past September.

Moving on, Friday’s US jobs report and ISM PMIs will be crucial for the traders to watch as firmer US NFP and PMIs could recall the bears.

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