Markets remain jittery, US dollar stays firmer

Traders remain cautious to begin the key week including US CPI, RBNZ and BOC rate decisions. The risk appetite also weakens on news concerning the US-China ties, Russia-Ukraine news and fears of more inflation, as well as an economic slowdown.

The risk-of mood gained strength after Friday’s upbeat jobs report and weekend news from Russia. Also keeping the traders on their toes are the stories relating to oil.

That said, the US dollar renewed its 20-year high the previous day before retreating from 107.78. The greenback gauge versus the six major currencies regains the upside momentum of late while rising 0.50% intraday.

Prices of gold and AUDUSD remain pressured, due to their risk barometer status whereas the USDJPY jumped to the highest levels since 1998 on firmer USD and yields. Further, BTCUSD and ETHUSD extend the previous day’s losses traders brace for more economic hardships.

Following are the latest moves of the key assets:

• Brent oil snaps two-day rebound while falling 1.5% to $107.60.
• Gold also remains pressured around $1,740, down 0.10% intraday at the latest.
• USD Index regains upside momentum, after Friday’s pullback from multi-year top, by marking 0.52% intraday gains near 107.45.
• FTSE 100 is down nearly 1.0% while STOXX50 and DAX are both losing nearly 2.0% by the press time.
• Wall Street closed mixed on Friday as traders await Q2 2022 earnings season.
• BTCUSD drops back to $20,500 while the ETHUSD bears also revisit $1,140 level as they both lose 2.1% and 2.4% respectively at the latest.

Bears keep eyes on the key events

Friday’s upbeat jobs report joined hawkish Fedspeak to keep risk-aversion safe on the table. The sour sentiment also took clues from doubts over China’s ability to propel the global economy and the risk of Eurozone recession, as conveyed by a Bloomberg poll. On the same line were chatters suggesting Russian President Vladimir Putin’s readiness to use nuclear weapons in case Ukraine counterattacks in Moscow-occupied Kherson.

On the contrary, US Secretary of State Antony Blinken’s 10-day Asia visit begins with Japan where the US diplomat sought strong US-Japan ties while also signaling worries about China’s support to Russia. China’s Foreign Minister Wang Yi tried to renew Sino-American relations by pushing for the establishment of rules for positive ties with the world’s top two economies.

Hopes of the US decision on China tariffs tried to appease the markets but the cautious mood ahead of this week’s key US inflation data, scheduled for publishing on Wednesday, weighed on the market’s optimism.

It should be noted that the US dollar’s upbeat performance joins a rebound in the US inflation expectations and a slowdown in spending, as well as earnings, numbers to keep sellers hopeful ahead of this week’s important central bank decisions and the US inflation release.

Cryptocurrencies also bear the burden of the market’s risk-aversion as traders’ rush to risk-safety underpins the US dollar while uncertainty surrounding Crypto’s future weighs on the once-famous currencies.

⏫ 🟢 Strong buy: USDCAD

⏬ 🔴 Strong sell: Nasdaq, silver, ETHUSD

⬆️ 🟢 Buy: USD Index, USDJPY

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

Second-tier data/events may entertain traders ahead of the key Wednesday

Speeches from the US, the UK and Eurozone policymakers could offer more clarity on the market fears before Wednesday’s key factors that include RBNZ, US inflation and BOC. It’s worth noting that US Secretary of State Blinken’s Asia visit and the Russia-Ukraine tussles may offer an extra boost to the risk-off mood. However, the oil prices may not cheer the geopolitical threats as the Middle East braces for more energy output.

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