AUDUSD justifies risk-barometer status amid firmer sentiment, downbeat yields

Markets portray a risk-on mood during early Monday, following a downbeat close to the last week, as the US policymakers defend Silicon Valley Bank and Signature Bank after the worrisome signals renewed fears of the financial crisis. In addition to the receding fears of multiple bankruptcies of the US banks, the reduction in calls favoring the Fed rate hikes also favored the sentiment. It’s worth noting, however, that the yields keep flashing recession risks and join the US-China tension to probe the optimists.

With the firmer risk profile and downbeat yields providing a double-barrel attack on the US Dollar, the AUDUSD rallies the most among the G10 currencies. Commodities and Antipodeans also benefit from the broad-based USD weakness but USDJPY appears only mildly offered as Yen struggles amid BoJ’s rejections of hawkish speculations.

Gold price refreshed its monthly high before easing to $1,877 but still print a three-day uptrend whereas Brent Oil portrays minor gains while extending the previous day’s rebound from a two-week low.

BTCUSD and ETHUSD extend the weekend rally amid short liquidations in the options market, as well as due to the broad US Dollar weakness.

Following are the latest moves of the key assets:

• Brent oil struggles to extend the previous day’s rebound above $83.00 at the latest.
• Gold rises for the fourth day in a row while printing mild gains near $1,875, following an early-day jump to five-week high.
• USD Index drops for the fourth consecutive day to 104.00 as we write.
• Wall Street closed in the red but equities in the Asia-Pacific region and shares in Europe and the UK trade mixed of late.
• BTCUSD and ETHUSD both remain bullish around $22,600 and $1,610 levels respectively.

Markets cheer US actions to defend financial crisis, Fed hawks’ retreat

Multiple key US market regulators stepped forward after SVB and Signature Bank flashed signs of bankruptcy. The government action to push back the odds of witnessing another financial crisis also reduce hopes of the Fed’s aggressive rate hikes, which in turn drowned the US Dollar.

Amid the immediate sigh of relief from witnessing the reprint of 2008 turbulence, as well as the downbeat US Dollar, the AUDUSD justifies its risk-barometer status by rising nearly 1.5% intraday. Other commodities and Antipodeans also followed the suit even as China President Xi Jinping’s sturdy stance on Taiwan joined dislike for the US interference.

It’s worth noting that the other major currency pairs were also smiling upon the US Dollar as the greenback fails to cheer upbeat NFP and the recession woes ahead of the key inflation numbers.

Elsewhere, huge options market position liquidations of Bitcoin and Ether joined the broad US dollar weakness to help BTCUSD and ETHUSD pare some of the previous weekly gains.

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

Sentiment is the key

Although a slew of inflation and employment numbers, as well as the European Central Bank (ECB) monetary policy meeting, are up for publication during the week, traders are likely to pay major attention to risk catalysts likely US financial market strength for clear directions.

May the trading luck be with you!