US dollar bulls don’t want to wait for Fed

Trade the news on September 21 2022

The pre-Fed risk-aversion intensified on early Wednesday as headlines from Russia and China suggested more to worry for traders. The US dollar, however, cheered the market’s rush for risk safety and rushed towards the 20-year high flashed earlier in September.

EURUSD bears approach the multi-year bottom while GBPUSD dropped to the fresh low since 1985. USDJPY, however, bucked the trend and printed mild losses while tracking a retreat in the yields, as well as the BOJ’s bond-buying.

Prices of gold also dropped struggles around the mid-$1,600s while crude oil rallied the most in eight days as Russia’s challenge to the West renew supply-crunch fears.

Cryptocurrencies aren’t left behind in portraying the US dollar strength as sellers poke the weekly low.

Following are the latest moves of the key assets:

  • Brent oil jumps to $94.00 as buyers cheer supply-crunch fears.
  • Gold remains sluggish at around $1,670 while paring the previous day’s losses.
  • USD Index rises to the fresh 20-year high near 111.00, up 0.50% near 110.75 by the press time.
  • DAX and Eurostoxx both print mild losses but the FTSE is up half percent at the latest.
  • Wall Street snapped a two-day uptrend with nearly 1.0% losses of the benchmarks.
  • BTCUSD prints mild gains around $18,950 while ETHUSD struggles to defend $1,300.

Risk-aversion it is!

Be it the recently higher odds of the Fed’s 1.0% rate hike or Russian President Vladimir Putin’s open warning to the West, not to forget China’s covid problems and the Sino-American tussles, everything contributed to the sour sentiment during early Wednesday.

The risk-off mood, however, failed to impress bond traders as the yields retreated from the multi-year high marked the previous day. Even so, the US dollar remains on the front foot ahead of the key FOMC.

EURUSD bears the double-barrel attack as hawkish Fed expectations join fresh fears from the Russia-Ukraine tension. GBPUSD also failed to cheer UK PM Truss’ optimistic plan to overcome the recession fears while USDJPY justifies the BOJ’s bond-buying announcement.

Gold seesaws inside the bearish territory, recently flashing mild gains, as fears from the world’s top commodity user China joins firmer USD to please bears. Crude oil, on the other hand, benefited from the fresh geopolitical woes to lead the energy bulls.

BTCUSD and ETHUSD remain pressured as the SEC’s pressure join fading optimism for Merge amid broadly downbeat trader confidence.

⏫ 🟢 Strong buy: AUDUSD

⏬ 🔴 Strong sell: ETHUSD

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

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

Fed’s 0.75% rate hike won’t be enough

Although the US dollar is on the uptrend, the Fed’s 75 bps rate hike is mostly priced-in and won’t be able to offer any major upside support to the greenback. As a result, the US central bank needs to announce either 1.0% rate increase or provide upbeat economic forecasts to keep the USD bulls on the table. Additionally, Fed Chair Powell’s speech and headlines from China and Russia will be crucial to watch for fresh impulse as well.

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