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MTrading Team • 2023-05-05

Gold pares recent gains despite softer USD as NFP looms

Gold pares recent gains despite softer USD as NFP looms

Market slips into consolidation mode as traders prepare for one last shot of the volatile day while waiting for the US NFP. Even so, the US Dollar remains pressured, reversing the previous day’s corrective bounce, whereas stock futures and Asian stocks grind higher. That said, Japan’s holiday season keeps restricting bond market moves even as yields dropped the previous day during the US session.

Gold and JPY buck the overall trend of cheering the US Dollar weakness as risk-aversion eases amid banking headlines and hopes of witnessing no recession. Further, Brent Oil prices extend the previous day’s recovery from the lowest levels in 2021 as demand woes recede.

On the other hand, AUDUSD leads the G10 currency pair gainers as the downbeat greenback joins the hawkish RBA Statement on Monetary Policy. NZDUSD and GBPUSD occupied second place even as China's PMI eases while the UK calendar appears unimpressive.

Cryptocurrencies are also on the front foot amid a jump in active deposits and easing fears of the harsh US regulations.

Following are the latest moves of the key assets:

  • Brent oil extends the previous day’s rebound from multi-month low to $74.00 at the latest.
  • Gold eases from an all-time high of $2,080 to $2,042 by the press time.
  • USD Index remains pressured near 101.20, licking its wounds at weekly bottom.
  • Wall Street closed with losses but the Asia-Pacific shares edged higher. That said, equities in Europe and the UK printed mild gains of late.
  • BTCUSD and ETHUSD grind higher around $29,100 and $1,900 as we write.
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Pre-NFP consolidation it is…

Although some traders on the floor turn optimistic of late by citing bank headlines, the overall fears of banking fallouts and US debt ceiling expiration remain intact. The same joins speculations that the ex-Fed central banks have room for further rate hikes to keep the risk-off mood on the table.

Elsewhere, China’s economic optimism lacks support from the PMIs but the UK activity data are strong and so do the early signals for the US jobs report, which in turn raises concerns that the US employment data may provide a positive surprise and fuel the USD.

It should be noted that the traders’ exhaustion after a volatile week and a lack of the US policymakers’ comments on the banking rout seem to underpin the market’s pessimism.

Furthermore, cryptocurrencies cheer higher deposits and the latest concerns that the US SEC isn’t after strong regulations.

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

US NFP, Canada employment numbers are crucial

Moving on, the pre-data anxiety may allow markets to extend the early-day moves as traders have mixed feelings considering the early signals of the US and Canadian jobs reports. However, the forecasts suggest downbeat prints of the NFP and Canada Employment Change, which in turn marks the risk of witnessing a positive surprise and paring of the week’s moves against the US Dollar.

May the trading luck be with you!