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MTrading Team • 2023-04-25

AUDUSD turns bearish as risk aversion triggers US Dollar rebound

AUDUSD turns bearish as risk aversion triggers US Dollar rebound

Sentiment turns sour during early Tuesday, following an upbeat start of the week, as fears of higher rates for longer join deadlock about the US debt ceiling plan ahead of June’s expiry. Adding strength to the risk-off mood are the geopolitical fears surrounding China and Russia.

However, the mixed US data and hopes of 0.25% Fed rate hike in the next week’s FOMC keep US Dollar on the front foot, which in turn weighs on the AUDUSD pair even as markets in Australia and New Zealand remained close.

Equities in the Asia-Pacific zone grind lower despite Wall Street’s mixed close. Further, the yields are on their recent south run while commodities flash mixed signals. That said, Gold price rebounded towards the $2,000 threshold whereas Crude Oil prints a three-day uptrend.

USDCHF and USDJPY fail to portray the US Dollar strength while EURUSD and GBPUSD return to the bear’s desk after the recent run-up.

Meanwhile, cryptocurrencies drop for the third consecutive day amid higher ETH withdrawals and the BTC’s inverse correlation with the Gold price.

Following are the latest moves of the key assets:

  • Brent oil prints a three-day uptrend near $83.15 by the press time.
  • Gold price extends week-start run-up towards $1,995 as we write.
  • USD Index marks the first daily gain in four around 101.50 at the latest.
  • Wall Street closed mixed while equities in the Asia-Pacific region remain pressured. However, shares in Europe and the UK print mild losses during the initial hour.
  • BTCUSD and ETHUSD remain pressured around $27,300 and $1,810.
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A sluggish but downbeat mood entertains traders

Although holidays in Australia and New Zealand restrict the market momentum, fears of recession and surrounding the US debt limit expiration, weigh on the sentiment. The same allows the US Dollar to print the first daily gains in four whereas the USDCHF and USDJPY trace their traditional haven status. Elsewhere, Gold price extends the week-start rebound whereas Brent Oil rises for the third consecutive day amid mixed signals.

It’s worth observing that the recently published activity data from the West has mostly been upbeat and suggest hawkish central bank actions despite looming recession fears, which in turn amplifies the risk-off mood.

To sum up, market players are mostly risk averse even as the lack of major data/events and a thin market presence limit the momentum.

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

US CB Consumer Confidence eye

Although a slew of major growth and inflation data are up for publishing, today’s US CB Consumer Confidence for March, Q1 GDP for the Eurozone and the US join the Fed’s preferred inflation gauge to gain the market’s attention ahead of next week’s FOMC. Should the scheduled data print upbeat figures, the odds of higher rates for longer can keep highlighting the recession fears and fuel the US Dollar. Additionally important as US debt ceiling talks and the geopolitical woes amid the Fed blackout period.

May the trading luck be with you!