AUDUSD ignores softer China inflation to increase as US Dollar eases on full markets’ return

The return of full markets brought together a risk-on mood during early Wednesday as traders seem less hopeful of Fed’s further rate hikes. Adding strength to the cautious optimism could be the upbeat expectations from China, as well as easing fears from banking fallouts.

The firmer sentiment joined downbeat US Treasury bond yields to weigh on the US Dollar and allowed the AUDUSD to cheer upbeat data at home, while also ignoring weak inflation at the largest customer China. NZDUSD, however, fails to cheer the upbeat risk profile despite grinding higher of late.

EURUSD and GBPUSD remain firmer as market players brace for a busy calendar during the holiday-shortened week amid hawkish calls for the ECB and the BoE.

Further, the Gold price snapped a two-day downtrend and the Crude Oil price prints the first daily gains in four whereas equities remain positive in the Asia-Pacific region despite mixed Wall Street closed.

BTCUSD and ETHUSD remain firmer at multi-day highs even as Bitcoin liquidations rally and Ethereum braces for the hard fork.

Following are the latest moves of the key assets:

• Brent oil prints the first daily gains in four around $85.00 by the press time.
• Gold also snaps two-day losing streak as bulls poke $2,005 as we write.
• USD Index retreats to 102.20 after rising in the last four consecutive days.
• Wall Street closed mixed but equities in the Asia-Pacific region, as well as shares in Europe and the UK, trade firmer afterward.
• BTCUSD and ETHUSD print notable gains near $30,150 and $1,930 at the latest.

An upbeat start to the crucial week

Be it China’s halt to military drills near Taiwan or IMF Chief’s comments suggesting upbeat growth in Asia, not to forget the reassessment of the hawkish Fed bets, traders had it all to portray a mildly positive start (for the full markets) of the key week. Furthermore, Australia’s deal with China over barley exports and likely jump in investments in China and Japan seem to favor the risk appetite and the AUDUSD prices.

Alternatively, China’s downbeat inflation numbers and odds that the Fed is all set for a 0.25% rate hike in May, even if it may announce a policy pivot afterward, seem to check the optimists.

Elsewhere, strong inflation signals from the UK and expectations of more fiscal measures in Britain favor the GBPUSD. Furthermore, hawkish ECB speaks and comparatively better data from Eurozone underpin the EURUSD rebound.

Prices of Gold and crude oil also cheer the risk-on mood and the US Dollar weakness even if the traders wish to wait for this week’s key US inflation and Fed minutes.

BTCUSD jumps to a fresh high since June 2022 while ETHUSD also remains firmer around the highest levels since August 2022, marked the last week.

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

EU data, policymakers’ speeches eyed

Eurozone Retail Sales will precede public appearances of multiple policymakers from the ECB and the Fed to entertain market players on Tuesday. However, risk catalysts and the bond traders’ reaction to the latest developments will be crucial for near-term directions. Above all, this week’s inflation and FOMC Minutes should be eyed carefully for clear directions.

May the trading luck be with you!