Crude Oil stays pressured after hefty weekly loss as risks dwindle ahead of key data week

Market players witness consolidation in the previous weekly moves amid cautious optimism early Monday. The same joins anxiety ahead of this week’s key data/events to challenge the US Dollar bulls but fail to help the Gold buyers in keeping the reins. Also, Crude oil remains pressured after posting the biggest weekly loss in 2024 amid easing geopolitical fears and concerns surrounding lower energy demand due to economic sluggishness in China.

With this, EURUSD extends the previous week’s recovery while GBPUSD licks its wounds at the yearly low after falling in the last two consecutive weeks. Further, USDJPY seesaws at the 34-year high marked Friday whereas AUDUSD and NZDUSD print daily gains to consolidate a two-week downtrend.

Moving on, BTCUSD and ETHUSD extended recovery after a three-week losing streak as a successful ending of the Bitcoin halving event triggered optimism among the crypto traders.

Following are the latest moves of the key assets:

• Brent oil drops more than half a percent to $86.50 after posting a heavy weekly loss.
• Gold snaps a two-day winning streak by falling around 1.30% intraday to $2,360 by the press time.
• The USD Index remains dicey around 106.00, mildly offered after a two-week uptrend.
• Wall Street closed mixed but the Asia-Pacific stocks edged higher. Further, European and UK shares print mild gains during the initial trading hour.
• BTCUSD and ETHUSD both rise more than 2.0% intraday to around $66,000 and $3,230 at the latest.

US Dollar pares recent gains...

US Dollar began the week on a softer footing amid the market’s consolidation ahead of the key data/events. Also challenging the greenback could be the mixed risk headlines.

Talking about the risk catalysts, the US-China trade war escalated as the Chinese Ministry Of Commerce levied 43.5% tariffs on imports of propionic acid from the US, a widely-used chemical in food, feed, pesticides, and medical fields.

Meanwhile, a Senior Iranian Official was quoted by Reuters as saying, “There is no plan for immediate retaliation.” This downplayed the geopolitical fears surrounding the Israel-Iran war and exerted downside pressure on the Crude oil prices.

It should be noted that the First Deputy Managing Director of the IMF, Gita Gopinath, addressed a fiscal forum at the IMF and World Bank spring meetings on Saturday and flagged fears emanating from the US fiscal deficit to the world, as well as their benefits to the US Dollar.

IMF’s Gita Gopinath said, "The high levels of deficits are also supporting growth and demand in the U.S. that have positive spillover to the rest of the world.” IMF’s Gopinath also added, "But along with that growth, you're getting higher interest rates and a stronger dollar and the second two are creating more complications for the world."

Not only Gopinath but IMF Managing Director Kristalina Georgieva also crossed wires during the weekend while stating that the central bankers need to finish the job with inflation, which in turn underpins the market’s hopes of lower rates going forward.

That said, the US Federal Reserve’s (Fed) Semi-Annual Financial Stability Report cited persistent inflation and tighter policy as the biggest risks and allowed the US Dollar to edge higher despite no major data/events, especially ahead of a two-week-long pre-FOMC blackout period for officials.

Elsewhere, Chicago Fed Governor Alan Goolsbee, a voting member of the FOMC, said that they have done great on the employment mandate but not on inflation. The policymaker also added, “It is not productive to speculate on conditions for raising or cutting rates.”

With this, the US Dollar and yields edge higher while challenging the buyers of Gold and crude oil of late.

On a different page, USDJPY traces firmer yields while making rounds to the highest levels since 1990 even as Bank of Japan (BoJ) Governor Kazuo Ueda said, “Irrespective of what the data will say shortly, we would like to find a way and timing to reduce the amount of Japanese Government Bond (JGB) purchases.” The policymaker also added that if underlying inflation continues to go up, we will very likely be raising interest rates. It’s worth noting, however, that the International Monetary Fund’s (IMF) Japan Mission Chief advocated for the weaker Yen while stating that the weak yen's impact on Japan's economic growth is net positive.

It’s worth observing that the EURUSD recovers from the yearly low even as the European Central Bank (ECB) officials push for lower rates. The reason could be linked to the recent positive data from the bloc, as well as the optimism about the old continent’s economic transition by the IMF.

In her latest comments, ECB President Christine Lagarde said, “If inflation criteria are met, it would be appropriate to reduce the current level of monetary policy restriction.” On the same line, Governing Council member Francois Villeroy de Galhau mentioned that the Middle East stress should not delay the June rate cut, with more to follow. Further, ECB’s Madis Muller said that he can see a few more rate cuts by year-end after June if the economy is in line with the ECB expectations. Alternatively, ECB’s Wunsche said that he doesn’t have a base case, but unlikely we cut only once in 2024.

Further, the IMF said that a soft landing for European economies is within reach but not assured. Additionally, Reuters came out with a report stating that Germany reportedly raised its economic growth forecast for the year. Additionally, IMF’s official Kammer mentioned that the ECB needs to be ready to be tighter, or looser, on my care policy.

Elsewhere, GBPUSD fails to cheer the hawkish comments from the Bank of England (BoE) policymaker Catherine Mann said that Central banks will have to use autonomy effectively. On the same line were statements from BoE Deputy Governor Dave Ramsden who mentioned, “We will take into account Forex implications for inflation.”

AUDUSD and NZDUSD cheer a pullback in the US Dollar and a cautious optimism in the market while USDCAD edges higher amid softer Crude Oil, Canada’s main export item, and dovish comments from Bank of Canada (BoC) Governor Tiff Macklem. During the weekend, BoC’s Macklem said, “Inflation is continuing to become less broad-based.”

• Strong buy: USDCAD, USDJPY, US Dollar
• Strong sell: AUDUSD, NZDUSD, GBPUSD
• Buy: BTCUSD, ETHUSD, Nasdaq, Gold
• Sell: DAX, FTSE 100, BTCUSD, EURUSD

A likely softer start to a crucial week…

While anxiety ahead of the top-tier data/events could restrict Monday’s market moves, a lack of catalysts on the calendar will also challenge the momentum traders. The same suggests a continuation of the early-day consolidation in the market moves. Even so, the preliminary readings of the Eurozone Consumer Confidence for April, a speech from ECB President Lagarde, and the US Chicago Fed National Activity Index for March will offer intermediate moves.

May the trading luck be with you!