Oil reverses weekly loss as US Dollar eases amid lackluster markets

Global markets turn dicey as traders take a breather after a volatile day that favored the US Treasury bond yield and the greenback, mainly backed by the strong US data. The cautious optimism also takes clues from China-linked news and preparations for the next week’s Fed minutes, amid a light calendar for the rest of the week.

Amid the sluggish initial hours of the day, the US Dollar retreats from a six-week high and helps Commodities, as well as Antipodeans, to pare recent losses. Among them, USDJPY leads the G10 gainers versus the USD while the Crude Oil outshines commodity basket by reversing weekly losses in a single day. Alternatively, GBPUSD fails to benefit from the softer greenback amid fears of a BoE policy pivot amid downbeat inflation and jobs report from the UK. 

Elsewhere, Wall Street closed with mild gains due to the day-end rebound while Asia-Pacific equities grind higher. On the same line, shares in Europe and the UK also print smaller gains during the initial hour of trading.

BTCUSD remains firmer after rising to a six-month high whereas ETHUSD seesaws near a fortnight’s top.

Following are the latest moves of the key assets:

• Brent oil rises the most in a week while posting nearly 1.0% intraday gains to $86.10 at the latest.
• Gold prints mild gains around the six-week low, up 0.20% on a day near $1,840 as we write.
• USD Index drops 0.20% intraday to 103.65 following its run-up to a 1.5-month high.
• Wall Street closed with mild gains and allowed the equities in the Asia-Pacific region, as well as the shares in Europe and the UK, to grind higher.
• BTCUSD and ETHUSD seesaw around the highest levels in six months and two weeks respectively.

Dicey markets trigger consolidation

Although the traders are cheering for the US Dollar’s pullback from a 1.5-month high, the overall market moves remain silent amid broad fears of more rate increases by the Federal Reserve (Fed). The reason could be linked to the recently firmer US data for Inflation, Employment and Retail Sales.

Even so, China’s readiness to share cordial relations with Asian peers and brakes on the rate hikes at home helps the commodities to recover. The same could have been the reason for the International Energy Administration’s (IEA) hopes of strong energy demand driven by China in 2023, which in turn will lead to a deficit in the Oil markets, per the IEA report.

That said, the fears of economic slowdown and no hopes of more rate hikes from the BoE weigh on the GBPUSD while hawkish concerns surrounding the BoJ puts a lid on the JPY prices.

Gold struggles to cheer the US dollar weakness amid technical concerns, as well as no major hopes for precious metal markets from India’s upbeat growth opportunities.

It should be noted that the US lawmaker’s reconsideration of easing the path for crypto investments into retirement funds seemed to have bolstered the BTCUSD and ETHUSD the previous day but fears of regulations appeared testing the Crypto bulls afterward.

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

Second-tier US data eyed ahead of Fed Minutes

More clues about the US employment, output and inflation are up publishing during the rest of the week and can entertain the traders. However, major attention will be given to the next week’s Fed Minutes, which in turn can keep the US Dollar on a firmer footing.

May the trading luck be with you!