US dollar stays pressured ahead of key data releases

Expectations that US inflation may have peaked in June underpinned the cautious optimism during early Wednesday. The positive mood also took clues from firmer China PMIs and sluggish yields.

Even so, recently firmer US data and hawkish Fedspeak seem to challenge the risk-on mood ahead of the Eurozone inflation numbers and the US ADP Employment Change. On the same line could be covid-linked headlines from Beijing and Russia’s total halt of gas supplies via the Nord Stream pipeline.

With this, the US dollar fades the previous day’s bounce, which in turn helped AUDUSD to lead the ex-USD bulls while talking about the G10 currency pairs. It should be noted, however, that gold and crude oil fails to cheer the greenback’s weakness amid a mixed mood whereas a pause in the bond selling weighs on the USDJPY prices.

Elsewhere, cryptocurrencies cheer softer USD and fears about Bitcoin mining, as well as optimism surrounding Ethereum.

Following are the latest moves of the key assets:

• Brent oil extends the previous day’s pullback from three-week top, down 1.25% near $99.00 at the latest.
• Gold drops for the fourth consecutive day as sellers attack $1,720 by the press time.
• USD Index struggles to lure buyers below 109.00.
• FTSE and DAX remain indecisive while Eurostoxx prints mild gains as we write.
• Wall Street closed with losses led by Nasdaq’s 1.12% daily fall.
• BTCUSD rises 2.40% intraday as it regains the $20,300 threshold while ETHUSD rises over 4.0% on a day while approaching $1,600.

It’s not a risk-on mood!

Despite an absence of risk aversion, the market’s optimism is far from reach as central banks keep pushing for higher rates while caring less about the economic slowdown. Also, multiple cities in China announced covid-led lockdowns and challenged the firmer sentiment. Additionally, the European energy crisis may escalate as Russia stopped gas supplies, even if it's for three days.

On the contrary, firmer data from Japan and China appear to test the greenback bulls amid anxiety ahead of the US NFP precursor, namely the ADP Employment Change.

It should be observed that the Asia-Pacific shares mildly bid and so do their counterpart in Europe and the UK. However, prices of gold and oil fail to improve as traders’ pessimism remains onboard.

Talks that Bitcoin mining may face hurdles joined the US dollar pullback to help BTCUSD. The moves joined optimism surrounding Ethereum Merge to keep buyers hopeful on the crypto front.

⏫ 🟢 Strong buy: USDJPY

⏬ 🔴 Strong sell: ETHUSD

⬆️ 🟢 Buy: USD Index, USDCAD, Nasdaq

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

Eurozone CPI/HICP, US ADP in focus

Having witnessed cautious optimism during the early Thursday, traders gear up for the first readings of the Eurozone inflation numbers and the US ADP Employment Change for August. Given the fears of recession and hawkish central actions, firmer data could recall the market bears and underpin the US dollar rebound.

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