US dollar stays depressed even as full markets return, oil, cryptos rebound

Financial markets affected by news on June 21

Market sentiment remains sluggish but there is no respite for the US dollar as traders brace for Fed Chair Powell’s testimony. The US Treasury yields remain firmer but can’t propel the gold prices.

Crude oil and Antipodeans try to cheer the softer USD but a lack of major data/events and the first day of the full markets seem to challenge the cautious optimism.

Cryptocurrencies are also in the recovery mode but the upside momentum remains doubtful as growth fears loom large.

AUDUSD benefits from the hawkish RBAspeak while the USDCAD print the biggest daily fall in a fortnight as softer USD joins firmer oil prices.

Following are the latest moves of the key assets:

  • Brent oil extends the rebound from the monthly low towards $116.00, up 1.3% at the latest.
  • Gold struggles for clear directions around $1,835.
  • USD Index remains on the back foot for the second consecutive day, down 0.45% around 104.00 by the press time.
  • FTSE 100 gains 0.80% but DAX and EUROSTOXX50 are up more than 1.0% by the press time.
  • BTCUSD and ETHUSD both gain near 4.0% while approaching $21,500 and $1,200 at the latest.

Risk flows remain positive, USD fails to rebound

Traders consolidate the previous weekly losses as central bankers try to tame the pessimism while keeping the fight against inflation intact. That said, the ECB tries to open the door for more broad-based rate hikes while RBA Governor Lowe hints at tighter monetary policies. US inflation expectations and downbeat data seem to weigh on the greenback as traders await second-tier statistics before Powell’s Testimony on the bi-annual monetary policy report.

Elsewhere, gold prices struggle to cheer China’s readiness for more stimulus as economic woes seem stronger. Crude oil prices, however, extend the previous day’s recovery from the monthly low amid downbeat USD, as well as fears of a supply crunch.

BTCUSD and ETHUSD recover from yearly low as traders lick their wounds amid hopes that the recession fears are temporary, at least for the e-currencies.

⏫ 🟢 Strong buy: USDJPY, USDTRY and USDCNY

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

⬆️ 🟢 Buy: USD Index, USDCAD

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

Canadian Retail Sales may entertain traders

Given the hawkish tone of the Bank of Canada (BOC), as well as the scheduled readings of Canada inflation data on Thursday, today’s Canadian Retail Sales will be important to watch. Also, the second-tier US data relating to housing and activities might entertain the traders as well. However, the return of the US traders and market sentiment ahead of Fed Chair Powell’s testimony will be the key catalysts.

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