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MTrading Team • 2022-08-24

Bulls battle with bears as market’s anxiety escalates ahead of Jackson Hole event

Bulls battle with bears as market’s anxiety escalates ahead of Jackson Hole event

Global markets remain fragile during early Wednesday, after witnessing a cautious optimism the previous day, as traders await important comments from the global central bankers at the annual Jackson Hole symposium. The risk-aversion amplified amid concerns relating to China and hawkish Fed policymakers’ statements. However, softer US data and a light calendar ahead of Durable Goods Orders kept traders on thin ice.

US Dollar remains firmer, following a failed attempt to renew a multi-year high, but Treasury yields retreat from the monthly peak.

NZDUSD led the bears as RBNZ hawks step back whereas USDJPY ignored the greenback’s strength on softer bond coupons, as well as due to covid-linked news.

The price of gold remains sidelined but crude oil extends recovery towards refreshing an eight-day top.

Cryptocurrencies stay on the bear’s table amid fears of more regulations, as well as an economic slowdown.

Following are the latest moves of the key assets:

  • Brent oil rises for the third consecutive day to poke the highest levels since August 12, up nearly 1.0% to $102.00 at the latest.
  • Gold struggles for clear directions around $1,750, after bouncing off monthly low the previous day.
  • USD Index struggles to convince buyers while printing mild gains near 108.60.
  • FTSE 100 declines 1.0% but DAX and Eurostoxx are down around 0.80% as we write.
  • Wall Street closed with mild losses, after an initially positive start, wherein Dow Jones led the bears with 0.47% loss.
  • BTCUSD drops 0.90% to $21,300 while ETHUSD declines around 2.2% at the latest as sellers attack $1,600 mark.
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Risk-aversion in play!

Economic slowdown fears escalate as Europe and China struggle to convince markets that they will be able to overcome the covid and geopolitical challenges. Even so, a light calendar and hopes that Fed’s Powell may not risk being too hawkish amid recession fears kept the markets in a dicey mode.

USD Index (DXY) seesaws around the highest levels in nearly two decades but the bullish momentum remains thin as recently flashed activity and housing data from the US appear enough to stop Fed hawks. Even so, Minneapolis Fed President Neel Kashkari tried to appease the expectations that the interest rates will be higher for some time.

China’s grim outlook weighed on Antipodeans even as Australia and New Zealand took some qualitative measures to tame supply crunch and inflation. 

Further, fears that Iran’s re-entry into the oil markets will supersede the anticipated output cut from the OPEC+ appear to challenge the crude oil buyers.

Elsewhere, BTCSD and ETHUSD extend their south-run towards refreshing monthly low as recession woes tame the use of cryptocurrencies, especially at the time when global regulators brace for more curbs.

⏫ 🟢 Strong buy: USDJPY

⏬ 🔴 Strong sell: ETHUSD

⬆️ 🟢 Buy: USD Index, USDCAD, Nasdaq

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

US data may entertain traders

Having witnessed grim signals from most of the US data recently, today’s Durable Goods Order and Pending Home Sales will be important for the US dollar bulls. Should the outcomes match downbeat forecasts, or even fall below the same, the odds of witnessing another pullback in the greenback can’t be ruled out. Even so, it all depends upon Friday’s speech of Fed Chair Jerome Powell at the Jackson Hole Symposium as Fed hawks don’t retreat.

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