Pre-NFP trading lull triggered early due to Thursday’s BOE

Trade the news on August 4 2022

Global markets turned dicey on early Thursday as traders prepare for the top-tier data/events, namely the Bank of England’s (BOE) monetary policy announcements and the US employment report. Also restricting the market moves was a lack of major catalyst on the calendar before the aforementioned triggers, except for Aussie trade numbers, ECB Bulletin and German Factory Orders.

The US dollar retreats amid a lack of inspiration and mixed clues surrounding the Sino-American tension over Taiwan. Also contributing to the greenback’s weakness could be downbeat US Treasury yields.

A downbeat US dollar helps gold to stay firmer but crude oil prices fail to regain upside momentum after the OPEC-led blow, as well as due to the recession fears.

AUDUSD and NZDUSD are among the biggest G10 gainers amid the market’s cautious optimism. USDCAD stands on the other hand due to the Loonie’s links with oil.

Cryptocurrencies also snap a six-day downtrend as USD weakness joins hopes of more investment in the field.

Following are the latest moves of the key assets:

  • Brent oil breaks $100 threshold to refresh three-week low.
  • Gold buyers head towards the monthly high marked on Tuesday, up 0.53% intraday near $1,775 at the latest.
  • USD Index snaps two-day rebound, down 0.08% near 106.30 by the press time.
  • FTSE 100 prints mild losses but Eurostoxx rises 0.90% intraday at the latest. Above all, DAX jumps 1.4% as we write.
  • Wall Street marked the biggest positive day in more than a week led by Nasdaq’s 2.59% daily gains.
  • BTCUSD and ETHUSD seesaw around $23,000 and $1,630 of late.

Taiwan issue didn’t register any instances

Market players appeared to have cheered the absence of any instances even as US House Speaker Nancy Pelosi visited Taiwan despite China’s warnings. Also favoring the cautious optimism could be the firmer earnings and the recently firmer activity data from the US, Europe and the UK. However, the recession fears keep yields on the back foot and weigh on the US dollar ahead of crucial US employment data up for publishing on Friday.

In addition to the USD weakness, the firmer Aussie trade surplus offered additional help to propel the AUD/USD prices. That said, chatters that China’s economy is gradually in recovery mode seemed to have helped NZDUSD and the market’s risk appetite.

In addition to the Antipodeans, the gold prices also cheered the US dollar weakness as the metal prints the biggest daily gains in a week while approaching the monthly top.

Even so, crude oil remains depressed near a three-week low OPEC+ announced a 100K bps output increase and the weekly US oil inventories marked a surprise jump in stockpiles. The same stopped USDCAD from cheering the softer US dollar.

It should be observed that USDJPY portrayed the weakness amid downbeat yields while EURUSD and GBPUSD stay mildly bid of late.

Elsewhere, BTCUSD and ETHUSD both prints the first daily gains in seven amid hopes of more investments in the field at the lower levels, as well as amid softer USD.

⏫ 🟢 Strong buy: USDJPY

⏬ 🔴 Strong sell: ETHUSD

⬆️ 🟢 Buy: USD Index, USDCAD, Nasdaq

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

BOE matters the most ahead of US NFP

Although the US dollar appears to be on the back foot, the key data/event are yet to play their roles and hence USD bulls shouldn’t be disappointed. That said, the BOE is likely to announce the biggest rate hike since 1995 but its economic forecasts may disappoint GBPUSD bulls and could help the greenback due to its safe-haven appeal. Alternatively, all positives from the BOE may allow the Cable pair to portray the much-awaited rebound.

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