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MTrading Team • 2022-08-22

Greenback bulls are dominant as recession fears grow ahead of Jackson Hole

Greenback bulls are dominant as recession fears grow ahead of Jackson Hole

Risk-aversion remains in full play as central bankers started accepting the fact that an economic slowdown is ahead, with Fed being the last to mention. China failed to convince traders even as policymakers tried to save the troubled real-estate sector.

US dollar bulls returned to the driver’s seat after a few days of holidays, which in turn weighed on the commodities and Antipodeans. NZDUSD became the day’s loser, so far, as PBOC’s rate cut appeared ephemeral.

Oil prices also weakened whereas gold refreshes its monthly low during the six-day downtrend.

BTCUSD and ETHUSD portray a bearish move as global policymakers rollout crypto regulations while recession woes add strength to the sour sentiment.

Following are the latest moves of the key assets:

  • Brent oil extends Friday’s pullback from a one-week high, down 0.70% intraday near $96.70 at the latest.
  • Gold drops for the sixth consecutive day to $1,744 by the press time as bears keep reins at one-month low.
  • USD Index ignores a pullback in yields to refresh the five-week high, up 0.12% intraday near 108.25.
  • DAX, Eurostoxx and FTSE 100 all lose nearly 0.40% to 0.80% by the press time.
  • Wall Street closed with notable losses wherein Nasdaq led the bears with 2.0% loss.
  • BTCUSD drops 0.50% to $21,400 while ETHUSD declines around 1.2% at the latest as sellers attack $1,600 mark.
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Market fears grow on recession woes

Be it the European energy crisis or China’s ailing real-estate sector, not to forget the softening of activities, everything points in the same direction, i.e. global economic slowdown. Even the central bankers who previously ruled out such scenarios are accepting the fact that the rate hikes aren’t the only way as recession fears loom. The latest among them were the policymakers from the Fed and the ECB, as well as the People’s Bank of China’s (PBOC) rate cut.

In addition to the economic slowdown fears, anxiety ahead of this week’s Jackson Hole symposium also underpins the US dollar’s strength. The reason is that the Fedspeak appears less hawkish as it seems that the previously given 0.75% rate hike in September is now doubtful.

Elsewhere, the economic calendar was light for Monday, except for the PBOC moves.

NZDUSD remains downbeat as RBNZ policymakers seemed a bit cautious whereas the USDJPY cheered the rush for risk safety while paying a little heed to a pullback in the yields.

Prices of gold and crude oil remain pressured while cryptocurrencies also hold lower grounds as authorities from the US, India and Australia flex their muscles for regulating the asset moves.

⏫ 🟢 Strong buy: USDJPY

⏬ 🔴 Strong sell: ETHUSD

⬆️ 🟢 Buy: USD Index, USDCAD, Nasdaq

⬇️ 🔴 Sell: DAX, FTSE 100, gold, BTCUSD

PMIs, Jackson Hole in focus!

In addition to the all-important annual conference of the global central bankers at Jackson Hole, flash readings of the August month PMIs will also be important to watch for clear directions. Additionally, US Durable Goods Orders, New Zealand Retail Sales and some second-tier housing and activity data from the US could also entertain traders. For today, Chicago Fed National Activity Index for July could decorate the calendar.

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