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MTrading Team • 2022-06-30

Markets remain fragile on recession chatters ahead of US PCE Inflation statistics

Markets remain fragile on recession chatters ahead of US PCE Inflation statistics

With the major central bankers showing readiness to bear responsibilities for the short-term economic slowdown to tame inflation, the market sentiment turns sour in early Thursday. However, anxiety ahead of the Fed’s favorite inflation measure joins China’s upbeat PMIs to control the bears.

As the US dollar struggles to extend the latest run-up around a fortnight top, some of the Antipodeans and majors manage to pare recent losses. However, prices of crude oil and gold remain depressed while USDJPY reverses from a 24-year high amid downbeat Treasury yields.

BTCUSD and ETHUSD aren’t spared from the risk-off mood as the key cryptocurrency pairs drop for the fifth consecutive day.

Following are the latest moves of the key assets:

  • Brent oil drops for the second consecutive day, down 2.5% near $112.75 at the latest.
  • Gold declines for the fourth consecutive day as sellers attack $1,815 with 0.20% daily loss.
  • USD Index retreats from two-week high, snaps two-day uptrend around 105.00.
  • FTSE 100 slides around 1.5% but STOXX50 and DAX are both down near 2.0% by the press time.
  • Wall Street closed mixed with Dow Jones’ mild gains battling no major changes in Nasdaq and S&P500 by the day’s end.
  • BTCUSD drops 3.70% to $1,9350 while ETHUSD loses more than 4.0% by flashing the $1,050 level at the latest.
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No place for optimism!

Although China’s official activity numbers came in strong and the German inflation also eased, the risk profile remains weak as growth fears loom.

On Wednesday, major central bankers appeared more hawkish and were ready to risk the short-term economic fall if they can overcome inflation fears with the heavy rate hikes. The chatters also gained momentum as Deutsche Bank, the first among major US banks that called for recession, anticipates a prolonged period of higher inflation and more worries for the central bank.

Elsewhere, the Russian blockage of Ukraine exports and the Sino-American trade tussles add strength to the risk-off. However, the cautious mood ahead of the US Core PCE Price Index appears to have restricted the rush to safe-havens.

On the crypto front, an exchange named dYdX dumped Ether to offer a fresh spark of selling in the once favored currencies, while the US dollar strength and risk-aversion already favor BTCUSD and ETHUSD bears.

⏫ 🟢 Strong buy: USDCAD

⏬ 🔴 Strong sell: Nasdaq, silver, ETHUSD, Brent oil

⬆️ 🟢 Buy: USD Index, USDJPY

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

Fed’s inflation pre-cursor in focus

US Core PCE inflation is the key catalyst for the market on Thursday even as higher prices are expected. The reason could be linked to the recently easy inflation numbers from Germany. It’s worth noting, however, that a surprise slump in the scheduled figures may not hesitate from portraying a knee-jerk reaction.

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