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MTrading Team • 2023-05-08

Crude oil stretches rebound from four-month low on softer US Dollar, mixed sentiment

Crude oil stretches rebound from four-month low on softer US Dollar, mixed sentiment

Markets turn dicey after a volatile week, helping riskier assets amid the downbeat USD. That said, a long weekend in the UK and France joins a light calendar elsewhere allowing traders to prepare for another rollercoaster week comprising the US inflation.

With the mildly optimistic scenario and softer US Dollar, Brent Oil manages to stretch the previous week’s rebound from a multi-month low whereas Gold price also reverses the retreat from the all-time high.

Among the major currency pairs, NZDUSD leads the gainers amid RBNZ’s hawkish signals versus the Fed’s dovish hike. Following that are the prices of AUDUSD and USDCHF.

It’s worth observing that Asian stocks remain positive while tracing Wall Street’s optimism whereas cryptocurrencies bear the burden of negative industry news.

Following are the latest moves of the key assets:

  • Brent oil rises for the third consecutive day, up 1.33% near $78.50 at the latest.
  • Gold regains upside momentum after the last week’s retreat from an all-time high, up 0.22% intraday near $2,021 by the press time.
  • USD Index remains pressured near 101.10, licking its wounds at the weekly bottom.
  • Wall Street closed with gains and so did the Asia-Pacific shares. That said, equities in Europe and the UK trade mixed during the initial hour.
  • BTCUSD and ETHUSD grind lower around $28,000 and $1,850 as we write.
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Measured optimism amid a softer start to the key week

Receding fears of US recession and banking crisis join upbeat US equities to underpin mild positivity in the markets during early Monday. Even so, looming concerns about the US debt ceiling expiry in June and the political jitters ahead of that prod bulls.

Together with this, the softer US Treasury bond yields and downward revision of the US NFP exert downside pressure on the US Dollar.

Given the US Dollar weakness and cautious optimism in the market, not to forget hopes of more supply cuts versus higher demand, the crude oil price improves while Gold remains firmer.

Elsewhere, NZDUSD turns out to be the biggest beneficiary from the US Dollar weakness, as well as hawkish RBNZ bias, whereas GBPUSD and USDJPY pare recent gains versus the USD.

Cryptocurrencies remain depressed as Binance halts Bitcoin withdrawals while Ethereum Foundation sold $30 million worth of ETH.

  • Strong buy: Gold
  • Strong sell: ETHUSD, GBPUSD
  • Buy: USD Index, USDCAD, Nasdaq, EURUSD

Nothing major on the calendar

Recent disappointments from German Industrial Production may allow the US Dollar to pare its latest losses whereas NZDUSD and AUDUSD are likely to remain firmer. That said, commodities may grind higher unless the US Dollar manages to recover on sour sentiment, as well as hawkish Fed talks. It should be noted that US CPI and talks about the US debt ceiling, as well as banking survey update, are this week’s key catalysts to watch for clear directions.

May the trading luck be with you!