Gold advances beyond $1,800 on US dollar pullback, China news

Markets begin March on a firmer footing as strong China PMIs contrast with softer US data. The same allows the US Dollar bulls to catch a breather after posting the biggest monthly gains in five. As a result, the commodities and Antipodeans manage to remain firmer while equities also grind higher after an initial pullback due to the softer Wall Street close.

Gold price rallies for the third consecutive day after refreshing the two-month low whereas Brent oil gains more than 1.0% to print the highest level since February 17.

NZDUSD appears the biggest gainer among the G10 currency pairs whereas the USDJPY pair bucks the trend amid firmer Treasury bond yields.

Further, BTCUSD and ETHUSD print the first daily gains in three while posting the biggest jump in more than a week by the press time.

Following are the latest moves of the key assets:

• Brent oil extends the previous day’s rebound with more than 1.0% daily gains to around $84.30 at the latest.
• Gold rises for the third consecutive day to $1,835, up 0.50% by the press time.
• USD Index prints mild losses after rising the most in five months in February.
• Wall Street closed with mild losses but the equities in the Asia-Pacific region, as well as shares in Europe and the UK, print minor gains as we write.
• BTCUSD and ETHUSD both report more than 2.0% daily upside as bulls poke $23,750 and $1,650 levels respectively.

Risk-on mood or a consolidation?

Although China PMIs triggered a fresh bout of risk-on mood on Wednesday, the inflation woes and the Fed rate hike chatters aren’t off the table. Also likely to challenge the sentient is the US-China tension as Beijing braces for the overhaul of government positions while the US eyes more trade with Vietnam and criticizes China-Russia ties. Hence, the latest optimism in the market appears elusive and may reverse after the top-tier data/events start flowing in. 

On the different page, the recent weakness in the US Consumer Confidence and manufacturing activity data also seems less reliable as the benchmark numbers are yet to roll. Furthermore, firmer US Treasury yields and the market’s bets on Fed fund futures keep challenging the risk takers.

Elsewhere, the run-up in cryptocurrencies seems more acceptable as industry news suggests more piling of bulls and receding fears of harsh regulations on their trading.

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

German CPI, US PMIs in focus

Looking ahead, Germany’s first readings of inflation and the key US activity data for February will be crucial for markets as recent optimism inspired by China data remain doubtful due to the nation’s reporting technique, as well as no change in the standing risk-negative catalysts.

May the trading luck be with you!