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MTrading • 2022-04-05

Wall Street-led optimism fades as USD, gold and cryptos remain indecisive but oil rises

Wall Street-led optimism fades as USD, gold and cryptos remain indecisive but oil rises

The US markets began the week on a positive note as banks and technology shares pleased bulls, also supported by hopes of Russia-Ukraine truce. However, traders turned cautious as chatters over the EU sanctions and the World Bank’s economic forecasts, as well as hawkish calls for the RBA and the RBNZ rate hikes, challenged the previous optimism. That said, the Treasury yields remain strong and keep underpinning the USDJPY bulls.

While AUDUSD and NZDUSD remain firmer, despite the RBA’s inaction, safe-haven assets like yen, gold and the US dollar fail to attract bids. The crude oil prices, though, remain firm amid fears of further supply crunch.

Equities in Asia-Pacific traded mixed but are mildly offered during the initial hour of European session whereas BTC/USD and ETH/USD print mild gains by the press time.

Following is the detailed performance report of the key financial assets:

  • BRENT OIL stays firmer with 0.30% intraday gains around $108.50.
  • GOLD remains lackluster around $1,930.
  • USD INDEX prints mild losses with the latest rate being $98.90.
  • DOW JONES, NASDAQ and S&P 500 all performed better on Monday, with 2.0% gains of Nasdaq.
  • DAX rises 0.50% reaching 14,590 rate whereas FTSE 100 reaches 7,560 level, down 0.10% intraday.
  • BTC/USD remains upbeat around $46,750, ETH/USD also rises 0.30% to $3,535 rate.
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Geopolitical, covid concerns weigh on market sentiment ahead of key data/events

While US stocks managed to extend Friday’s gains, Tech rally propelled Nasdaq and the banks helped print the welcome start to the week comprising FOMC minutes and Fedspeak, not to forget ISM PMIs for March. Adding to the optimism were expectations that Ukraine and Russian leaders will agree to have the first personal meeting for the truce.

The mood, however, soured after the World Bank cut down economic forecasts for the East Asia and the Pacific region while citing geopolitical consequences in Kyiv. Adding to the fears are the concerns that the European Union (EU) will announce more sanctions on the Russian energy sector, as well as the coronavirus woes in China.

Furthermore, increasing bets over the RBNZ and the RBA rate hikes joined firmer US inflation expectations to weigh on the market’s risk appetite.

Crude oil prices extend Monday’s gains amid concerns that the fresh concerns in Bucha and Mariupol of Ukraine will negatively affect the peace talks. On the same line was the US-led push for more sanctions on Moscow, as well as Reuters report that the US stopped Russian banks from paying bond coupons. Also contributing to the oil’s strength is the halt in the US-Iran talks that might have loaded more crude into the markets.

While equities were firmer on Wall Street, gold and USD, as well as cryptocurrencies, couldn’t cheer the cautious mood during the Asian session. 

Amid these plays, BTCUSD prints three-day uptrend despite the latest consolidation whereas the ETHUSD regain upside momentum after a softer start to the week around three-month high.

Current trends

Risk-on continues with a slow grind but prices of crude and gold play different songs amid skepticism:

⏫ 🟢 Strong buy: DAX, FTSE 100, and BTC/USD

⏬ 🔴 Strong sell: DOW JONES, S&P 500

⬆️ 🟢 Buy: USD Index, ETH/USD, Nasdaq

⬇️ 🔴 Sell: Brent oil, Silver, Gold

Bulls should be cautious with eyes on Ukraine, central banks

Global markets are likely to witness a pullback in the optimism considering the latest jitters between Ukraine and Russia, as well as between the US and Iran. Adding to the fears could be hawkish comments from the major central bankers and upbeat PMIs. However, cautious comments from FOMC minutes and positive updates over Kyiv may help recede the market pessimism, which in turn can underpin riskier assets like commodities, Antipodeans and cryptocurrencies.

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