GBPUSD bears the burden of softer UK CPI, US Dollar rebounds amid risk aversion

US inflation-linked pessimism keeps markets on the dicey floor, mostly downbeat, during early Wednesday. Adding to the sour sentiment could be fears of hawkish Fed moves despite looming economic fears.

With this, the US Treasury yields refresh their monthly high and trigger the US Dollar recovery amid an unimpressive session. The same joins the cautious mood ahead of a few more consumer-centric and output data from the US to weigh on the prices of commodities and Antipodeans.

As a result, Crude oil drops the most in over a week during a four-day downtrend while Gold price remains depressed while refreshing the six-week low.

Among major currencies, AUDUSD dropped the most, with nearly 1.3% intraday losses, due to its risk barometer status, as well as due to RBA Governor Philip Lowe’s failure to convince markets of their rate hike capacity. Following that were the NZDUSD and the GBPUSD. It’s worth noting that the softer prints of the UK CPI and Core CPI exert additional downside pressure on the Cable pair.

Elsewhere, equities in the Asia-Pacific zone grind lower while tracing Wall Street’s losses. Further, cryptocurrencies also remain depressed by reversing from weekly highs.

Following are the latest moves of the key assets:

• Brent oil drops for the fourth consecutive day, down 0.90% near $81.50 at the latest.
• Gold refreshes 1.5-month low near $1,835 while reversing the previous day’s bounce.
• USD Index rises for the first time in a week, up 0.30% intraday around 103.60 by the press time.
• Wall Street closed mixed but the equities in the Asia-Pacific region, as well as the shares in Europe and the UK, print mild losses afterward.
• BTCUSD and ETHUSD both appear mildly offered near the weekly high, close to $22,100 and $1,550 as we write.

Risk-off sentiment returns despite sluggish US inflation

Even if the US inflation eased for the seventh consecutive month on a YoY basis, testing the 2021 levels, the Federal Reserve officials appear determined to push back policy pivot chatters and managed to renew the US Dollar demand. The Fed talks also pay little heed to the recently sluggish data and looming recession woes, which in turn amplified the risk-off mood afterward, adding strength to the US Treasury bond yields and triggering the US Dollar’s run-up.

The sour sentiment joins the RBA Governor Philip Lowe’s cautious testimony to highlight the risk-barometer AUDUSD pair as the biggest loser among the G10 currency pair.

On a different page, the UK witnesses downbeat CPI data for the third consecutive month and recollect the previous day’s mixed jobs report printing the GBP/USD pair’s biggest daily slump in over a week.

Gold and Crude Oil fails to battle the USD rebound and dropped more than 1.0% by the press time whereas equities are downbeat of late.

BTCUSD and ETHUSD pare the previous day’s gains around the weekly tops amid a firmer US Dollar and fears of more regulations, not to forget bearish industry signals.

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

US data eyed

Having witnessed the key inflation numbers from the UK and the US, market players may wait for more consumer-centric data from these top-tier economies to confirm the latest pessimism. The same, if confirmed by the scheduled statistics, could allow the US Dollar to extend the latest gains and exert additional downside pressure on riskier assets like equities, commodities and Antipodeans.

May the trading luck be with you!