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MTrading Team • 2022-08-10

China inflation ignored ahead of US CPI, prices of gold, oil drop on cautious mood

China inflation ignored ahead of US CPI, prices of gold, oil drop on cautious mood

Global markets remain depressed as fears of the Fed’s aggression intensify ahead of the US inflation data for July. Also contributing to the risk-off mood could be the softer CPI and PPI data from China, which in turn faded hopes of the dragon nation’s economic recovery after witnessing covid-led lockdowns. 

Furthermore, Russia’s halt in oil supplies also added strength to the sour sentiment. It should be noted, however, that the cautious mood prior to the key data restricted the trading moves, especially amid fears of economic slowdown. 

The US dollar struggles to regain traction despite increased expectations of the Fed’s aggressive rate hike. Even so, prices of oil slumped whereas gold also pares recent gains around the monthly high.

Cryptocurrencies remain pressured as more players leave the front and file for insolvency. Also challenging the BTCUSD and ETHUSD traders were concerns that the policymakers will take a hard stand versus the established players amid the latest rush of bankruptcies.

Following are the latest moves of the key assets:

  • Brent oil snaps a three-day rebound while declining nearly 1.0% to $98.30 by the press time.
  • Gold retreats from its monthly peak, down 0.16% near $1,790 at the latest.
  • USD Index remains sluggish near 106.30, down 0.07% as we write.
  • FTSE 100 prints mild losses but Eurostoxx and DAX remain indecisive.
  • Wall Street closed in the red with Nasdaq leading the bears with 1.20% daily losses.
  • BTCUSD and ETHUSD are both on the losing side, down 0.85% and 0.65% in that order as sellers attack $23,000 and $1,690 by the press time.
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Recession fears dominate amid hawkish Fed bets

With one more Russian energy pipeline halting supplies to Europe, the fears of economic slowdown gain stronger. The same joins the increased market bets for the Fed’s aggressive rate hikes to weigh on the sentiment, especially after Tuesday’s second-tier US jobs numbers flashed firmer numbers.

The concerns surrounding the recession are strong enough to drown the crude oil prices despite the Russian actions and OPEC+ resistance to raising output. Commodities like gold, steel and copper also eased after China reported softer inflation data for July, dashing expectations that the world’s largest commodity user will overcome covid-led economic crisis sooner.

With the commodities down, Antipodeans also couldn’t cheer the sluggish US dollar and printed mild losses, tracking the stock futures and Asia-Pacific shares.

Talking about cryptos, Germany’s crypto bank Nuri filed for bankruptcy but Iran’s use of $10 million worth of e-currencies tried to defend the bulls. Even so, BTCUSD and ETHUSD print losses after snapping a two-day uptrend the previous day.

⏫ 🟢 Strong buy: USDJPY

⏬ 🔴 Strong sell: ETHUSD

⬆️ 🟢 Buy: USD Index, USDCAD, Nasdaq

⬇️ 🔴 Sell: DAX, FTSE 100, gold, BTCUSD

US inflation is the key

Traders are likely to witness sluggish moves ahead of the US CPI for July as the market forecasts suggest a softer print but the initial signals have been favoring the need for the Fed’s another 0.75% rate lift in September. Should the actual data arrive as strong, the US dollar could reverse the weekly losses, which in turn might weigh on the prices of commodities and Antipodeans. EURUSD and GBPUSD are likely to witness extra downside as the political crisis at home joins grim economic concerns.

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