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Denis Sergienko • 2023-01-09

AUDUSD portrays risk-on mood as China, Fed talks favor optimists

AUDUSD portrays risk-on mood as China, Fed talks favor optimists

Market sentiment improves as the inflation week begins. Headlines from China add strength to the upbeat risk profile, especially after Friday’s US data drowned the greenback.

Given the optimism amongst traders, the risk barometer AUDUSD pair jumps to the highest level in four months. On the same line, the US Dollar's weakness offers extra strength to the buying of commodities and Antipodeans.

It’s worth noting, however, that holiday in Japan restricts bond market moves in Asia while the US stock futures and equities in Europe and the UK remain firmer as of late. Further, Gold renews an eight-month high while Brent oil buyers approach the $80.00 threshold.

Elsewhere, BTCUSD and ETHUSD also benefit from the softer USD to refresh three-week highs.

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Following are the latest moves of the key assets:

  • Brent oil extends the previous day’s run-up towards $80.00, up 1.40% intraday by the press time.
  • Gold buyers keep the reins near $1,880, the highest level since May 2022.
  • USD Index holds lower ground near 103.60 while keeping Friday’s losses.
  • Wall Street closed in the green and helped stocks in the Asia-Pacific region, as well as the equities in Europe and the UK.
  • BTCUSD and ETHUSD remain firmer as bulls stay in the driver’s seat around $17,200 and $1,310 in that order.

China unlock, Fed concerns are the key

China’s opening of the international borders after a three-year stoppage fuels the market’s optimism as the final shot to the dragon nation’s zero-covid policy. Additionally favoring the risk appetite could be the headlines from the PBOC and local forecasts from Beijing signaling upbeat growth opportunities despite the latest jump in the virus numbers.

On the other hand, slow US wage growth joined downbeat ISM Services PMI and factory orders to renew US recession woes and pushed back the hawkish expectations from the Fed. The same could be sensed in the latest commentary of the Federal Reserve officials.

With the risk-on mood in full swing, despite the off in Tokyo, NZDUSD and AUDUSD renew multi-day highs while the EURUSD and GBPUSD extend the previous day’s recovery moves to approach crucial resistances.

It should be noted that upbeat chain matrices for Bitcoin and Ethereum joined the softer USD to propel BTCUSD and ETHUSD.

  • Strong buy: GBPUSD
  • Strong sell: ETHUSD, USDJPY
  • Buy: USD Index, USDCAD, Nasdaq, EURUSD
  • Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

A light calendar to kick-start the busy week

The clouds of Japan’s extended weekend are likely to shadow the western sessions amid a lack of major data/events before the key inflation numbers from China, Japan and the US gain the market’s attention. Also important will be the UK’s data dump and central bankers’ speeches which will be eyed to forecast the next moves of the Fed, ECB, BOC and BOJ. Even so, Monday is likely to keep the week-start optimism, despite anticipated sluggishness.

May the trading luck be with you!