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MTrading Team • 2022-07-04

US holiday allows greenback bulls to take a breather without improvement in sentiment

US holiday allows greenback bulls to take a breather without improvement in sentiment

Jittery markets continue to roil risk profile during early Monday. Even so, the US dollar pares recent gains around a two-week high amid the US Independence Day holiday. 

Traders remain worried amid escalating fears of recession, as well as fresh risk-negative headlines from China and Russia, as traders await the key data/events scheduled for the week.

Antipodeans managed to pare recent losses around a multi-day low but the prices of gold and crude oil struggle for clear directions.

Crytpocurrencies snap two-day rebound as traders fear more hardships for the e-currencies.

Following are the latest moves of the key assets:

  • Brent oil struggles to extend Friday’s corrective pullback from the weekly low, around $114.50 with mild losses by the press time.
  • Gold reverses Friday’s corrective pullback from a five-week low, pressured around $1,810 at the latest.
  • USD Index remains sidelined around 105.00 after refreshing a two-week high.
  • FTSE 100 remains directionless around 7,235 but STOXX50 and DAX print mild gains.
  • Wall Street surprisingly closed positive on Friday as investors braced for the Q2 earnings season.
  • BTCUSD drops 1.00% to $19,100 while ETHUSD loses over 2.0% to $1,050 by the press time.
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Risk-off continues despite USD pullback

Friday’s US PMI intensified the risk-off mood but the central bank commentary remains hawkish ahead of this week’s Fed Minutes and the US NFP. Adding to the risk-aversion is the fresh covid-led lockdown in China’s Anhui province, as well as Russia’s claim of having complete control over Ukraine’s Lysychansk region.

Furthermore, political turmoil in the UK, Europe and chatters surrounding ECB’s plan to stop banks from employing the funds received during the pandemic to reap more gains also weigh on the market sentiment. Elsewhere, China’s upbeat PMIs and PBOC’s fundraising via HKMA, with the help of swaps, keep traders worried.

On a different page, the options market shows a gradual strengthening in the US dollar buying and gold selling, suggesting further hardships for the yellow metal.

Talking about BTCUSD and ETHUSD, the bears aren’t off the board as traders fail to cheer the latest corrective pullback amid doubts over the future demand and regulation concerns.

⏫ 🟢 Strong buy: USDCAD

⏬ 🔴 Strong sell: Nasdaq, silver, ETHUSD, Brent oil

⬆️ 🟢 Buy: USD Index, USDJPY

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

Fed Minutes, US NFP in focus

Despite the holiday-shortened week, global traders are likely to witness more volatility except for Monday’s likely corrective pullback due to the US holiday. The recovery moves, however, may not recall the risk-on mood with eyes on the FOMC Minutes and the US employment report for June.

Overall, traders await any change in the central bankers’ hawkish bias after the recently softer data from the US. If that remains absent, the US dollar bulls can keep the reins.

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