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MTrading Team • 2022-10-05

Risk-on mood fades as traders brace for key data

Risk-on mood fades as traders brace for key data

Market sentiment appears to have shed the previous optimism as the US dollar and Treasury yields rebound ahead of important data releases. Also keeping traders on their toes is the RBNZ’s another 0.50% rate hike, disrespecting the United Nations’ indirect push to global central banks to ease on rate hikes, which the RBA seemed to have respected well. However, the resumption of gas supplies to Italy from Russia’s Gazprom and the absence of China for the whole week challenged the market bears.

The greenback’s strength triggered the much-awaited corrective pullback in major currencies and dragged the EURUSD despite hopes of easing the energy crisis. The NZDUSD, however, cheered the RBNZ’s heavy rate hike and the AUDUSD also followed the Kiwi pair’s small gains. 

Gold retreats from a three-week high while snapping the six-day uptrend but prices of crude oil resist declining amid fears of supply cuts.

Elsewhere, BTCUSD and ETHUSD also flash the first daily loss in three amid fresh fears from the Federal regulators.

Following are the latest moves of the key assets:

  • Brent oil remains sidelined around $93.00, struggling to extend the two-day run-up as we write.
  • Gold snaps six-day uptrend, declining to $1,720 at the latest.
  • USD Index rebounds from a fortnight low, up 0.26% near 110.50 by the press time.
  • FTSE losses 0.30% on a day but Eurostoxx and DAX are both down around 0.25% intraday.
  • Wall Street closed with notable gains led by Nasdaq’s 3.34% upside.
  • BTCUSD retreats to $20,200, down 0.60%, whereas ETHUSD drops 0.60% as sellers poke the $1,350 level.
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All that rises has to fall…

The proverb seems rightly describe the gold price moves that dropped for the first time in seven days while reversing from the three-week top. However, the bears aren’t convinced yet as the top-tier data is ahead.

The sour sentiment in the market couldn’t stop the NZDUSD and the AUDUSD pair to remain firmer after the respective central banks hiked benchmark rates. The EURUSD pair, on the other hand, couldn’t cheer receding fears of the gas outage.

On Tuesday, the market sentiment remains firmer as the softer prints of Factory Orders followed the downbeat ISM Manufacturing PMI. On the same line were the chatters about the United Nations' indirect push to global central banks to ease rate hikes. Also favoring the risk-on could be the US determination to ease the supply crunch and the holidays in China.

It should be noted, however, that the bears are yet to justify their strength and the key US jobs report, as well as the early signals like ISM Services PMI and ADP Employment Change, are yet to be released.

⏫ 🟢 Strong buy: USDJPY

⏬ 🔴 Strong sell: ETHUSD

⬆️ 🟢 Buy: USD Index, USDCAD, Nasdaq, EURUSD

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

Second-tier data to entertain traders

With the US ISM Services PMI and ADP Employment Change scheduled for release, traders are likely to witness further volatility moving forward. The return of the bond bears could also ensure that the US dollar benefits and regains the upward trajectory. The same is likely to weigh on the commodities and Antipodeans, not to forget the EUR and the GBP mainly. Above all, the markets are likely to grind lower ahead of Friday’s key US jobs report.

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