AUDUSD portrays risk-on mood amid year-end holiday season

Market sentiment improved as traders cheer the return of full markets, after a long weekend, amid China-linked optimism. The positive mood also takes clues from softer US data, as well as the year-end consolidation in the US dollar.

Given the Aussie-China ties and the AUDUSD pair’s risk-barometer status, the quote rallied the most in the Asian session. USDJPY stood on the other hand as Japan PM Kishida joined hands with BOJ Governor Kuroda to push back the Yen bulls who dominated the last week.

The risk-on mood could also be witnessed in the prices of Gold and Crude Oil while the US Dollar drops for the third consecutive day.

Even so, BTCUSD and ETHUSD print mild losses as a cyber attack on the world’s seventh-largest mining poll raised fears of harsh regulations moving forward.

Following are the latest moves of the key assets:

• Brent oil retreats from a three-week high marked earlier in the day but still posts 0.45% gains near $84.50 as we write.
• Gold extends Friday’s gains to $1,807, up half a percent by the press time.
• USD Index drops for the second consecutive day to 103.95 at the latest.
• Wall Street closed with minor gains on Friday and helps stocks in the Asia-Pacific region, as well as in Europe and the UK.
• BTCUSD and ETHUSD print mild losses around $16,800 and $1,220 in that order.

A rosy end to volatile 2022?

Although there is no clarity on the Covid conditions in China, as well as the recent jump in the COVID-19 numbers elsewhere, Beijing reopening for inbound travelers boosted the market’s morale during an otherwise dull session. Adding strength to the risk-on mood could be Friday’s softer prints of the US Core PCE Price Index, the Fed’s preferred inflation number. 

Elsewhere, the People’s Bank of China (PBOC) heavily drowned USDCNY fix and infused the most funds in the market, week-on-week, in two months, which in turn helped traders to remain positive. 

Alternatively, China’s military drill near Taiwan and Russia’s readiness to give a “military” response to Ukraine joined the North Korean drone sneaking into South Korea to challenge the mood.

It’s worth noting that the softer US Dollar portrayed the market’s optimism and so do the AUDUSD, despite China’s downbeat industrial profits for January-November.

Mixed headlines surrounding the energy front, mainly from Moscow, seemed to have initially propelled Crude oil towards refreshing the multiday top before the latest pullback. Even so, the black gold remains firmer on a day by the press time.

Talking about cryptos, a cyber attack on BTC.com, which holds the world’s seventh-largest mining poll, challenged the previous corrective bounce in the BTCUSD and the ETHUSD.

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

Nothing major ahead…

Although most major trading bourses are back in motion, after the Christmas holidays and Boxer Day off, the economic calendar remains light until Saturday when China releases the official PMI data. However, the risk catalysts could entertain the traders, as they did today.

May the trading luck be with you!