Pre-Powell caution recalls USD bulls, oil prices, BTCUSD rise too

Global traders turn anxious in early Thursday, after witnessing cautious optimism the previous day, as markets await speeches from various central bankers including Fed Chair Jerome Powell. Adding to the risk-aversion are comments from IMF’s MDManaging Director Kristalina Georgieva, as well as the mixed performance of Wall Street.

The cautious sentiment renews the US dollar buying, as well as recalls the bond bears, which in turn weigh on prices of gold and Antipodeans. Crude oil prices, however, rebound from a one-week low on a surprise inventory draw and fears of an escalation in the Russia-Ukraine war.

It’s worth noting that BTCUSD and ETHUSD got some relief news to reverse Wednesday’s pullback from the monthly high.

In addition to the speeches from ECB, BOE and Fed leaders, second-tier US data may also add to the market’s volatility.

Following is the list of major assets’ latest performances:

• BRENT OIL consolidates recent losses around $108.00, up 0.50% at the latest.
• GOLD drops back to $1,950, after Wednesday’s rebound, losing 0.30% intraday.
• The USD Index prints mild gains around 100.50 rate.
• Dow Jones rose 0.70% but S&P 500 remained sluggish near 4,460, Nasdaq declined 1.2% to 13,453.
• BTCUSD and ETHUSD regain upside momentum and print around 0.70% intraday gains each by the press time.

Back to the bear’s table

Although mixed comments from Fed policymakers and a pullback in the US Treasury yields triggered the profit-booking in the USD the previous day, global markets remained dicey with eyes on today’s speech from Fed’s Powell. The consolidation could also be linked to the recent easing in covid numbers from China, as well as Wall Street’s mixed performance.

That said, Nasdaq had to bear the burden of Netflix’s slump but upbeat earnings from IBM and Procter & Gamble helped Dow Jones to print mild gains. S&P 500 remained directionless though.

Asia-Pacific markets also lack clear direction as equities from Japan, Australia and India print mild gains but China and New Zealand print losses at the latest.

Risk appetite turns weak and propels the US dollar while the bond yields add strength to the greenback’s recovery. Though, gold prices don’t benefit from the latest cautious mood while EIA inventories and fears of more geopolitical tussles in Ukraine help Brent oil prices to recover.

Other than the pre-Powell caution, comments from the IMF’s MD, citing fears of China’s covid resurgence for the global economy, also weigh on the market sentiment of late.

Elsewhere, hopes that bitcoin ETF might win the US SEC approval and glassnode data favor BTCUSD buyers whereas successful testing of Ethereum’s ‘Merge” adds strength to the ETHUSD.

⏫ 🟢 Strong buy: USDJPY

⏬ 🔴 Strong sell: Nasdaq

⬆️ 🟢 Buy: ETH/USD, BTC/USD, USD Index, gold

⬇️ 🔴 Sell: DOW JONES, S&P 500, DAX, FTSE 100, Brent oil, Silver

All eyes on central bank divergence and inflation

The risk-off mood is likely to prevail on Thursday, amid hopes of central bankers’ comments to tame faster inflation. However, the ECB and the BOE may not sound as hawkish as the Fed, which in turn could magnify the central bank divergence and propel the greenback.

In a case of a surprise move, the short-term USD bears won’t hesitate to take a risk as the greenback trades near the multi-month high. The same can also drag the USDJPY down from over two decades’ high.

The cryptocurrencies, however, may react with conservatism due to the individual fundamentals.

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