Cautious optimism probes US dollar bulls, EURUSD struggles

Global markets stabilize after a roller coaster Thursday that drowned the US dollar despite firmer US inflation data. Equities extend the previous day’s gains but the yields retreated amid the market’s fears of higher rates.

On the contrary, expectations of more stimulus from China and the UK, as well as Japan’s defense of easy money, keep the traders hopeful, which in turn probe the bears despite the recent run-up in the greenback.

That said, NZDUSD gains the most among the G10 currency pairs while EURUSD bears the burden of recession fears in the bloc. Further, GBPUSD leads the sellers amid uncertainty over the UK government’s next move.

Prices of oil and gold remain volatile with the latest prints being positive whereas cryptocurrencies remain firmer by the press time.

Following are the latest moves of the key assets:

• Brent oil grinds higher past $95.00 after bouncing off one-week low.
• Gold also remains directionless as it takes rounds to $1,665.
• USD Index pares Thursday’s pullback from two-week high, mildly bid near 112.65.
• FTSE prints mild gains but Eurostoxx and DAX are both up more than 2.0% by the press time.
• Wall Street closed in the green led by Dow Jones’ 2.83% upside on the day.
• BTCUSD braces for the third weekly gain around $19,600 while ETHUSD rises 2.60% to regain $1,320 level but remains mildly offered on a week.

Mixed feelings after a volatile session

Thursday’s US Consumer Price Index (CPI) triggered heavy volatility in the markets despite crossing the forecasts with the firmer prints for September. The reason could be linked to the third consecutive softer prints and receding wagers of the Fed’s 100 bps rate hike. With this, the US equities rallied after refreshing the yearly low and the Asia-Pacific shares also rose. The risk-on mood allowed commodities and Antipodeans to portray the much-awaited rebound from their yearly bottoms even as covid woes renewed.

The sentiment, however, turned mixed as market players brace for Friday’s Western sessions. That being said, the US dollar pares recent losses and the EURUSD also returns to the bear’s plate after a brief absence. The ECB’s readiness for higher rates and taming the budget deficit might have played their role. On the same line was the GBPUSD pair that reverses the latest gains amid fears that the UK government isn’t stable and has no concrete plans to revive British economic growth.

It’s worth mentioning that fears of a supply crunch defend crude oil buyers while gold also seesaws amid mixed concerns over its safe-haven appeal and the US dollar’s bounce.

Elsewhere, leading cryptocurrencies also cheered the US dollar weakness to stretch Thursday’s bounce off the monthly low. Also, arguments over crypto as a hedge to inflation joined efforts to support Bitcoin mining and increased participation by developers to add strength to the BTCUSD and ETHUSD.

⏫ 🟢 Strong buy: USDJPY

⏬ 🔴 Strong sell: ETHUSD

⬆️ 🟢 Buy: USD Index, USDCAD, Nasdaq, EURUSD

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

Another round of US data looming

Having witnessed a surprise reaction to the US inflation, market players prepare for the US Retail Sales and University of Michigan’s Consumer Sentiment Index. Should the scheduled data print the anticipated firmer outcomes, the US dollar may extend the latest rebound. Additionally, rumors that the UK PM will announce fiscal plans and Japanese policymakers are on their way to intervene also keep the traders on the edge.

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