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MTrading Team • 2023-03-21

Crude oil drops back towards multi-month low as US Dollar recovers amid sluggish markets

Crude oil drops back towards multi-month low as US Dollar recovers amid sluggish markets

Global markets maintain cautious optimism as policymakers try hard to ward off the risks emanating from the banking crisis. Adding strength to the mildly positive outlook could be the central bankers’ and diplomats’ comments suggesting a slower-than-expected economic slowdown ahead. However, the traders remain unconvinced and stay on the sideline ahead of this week’s top-tier central bank events, as well as PMIs.

The same joined late Monday’s recovery in US Treasury bond yields to underpin the US Dollar’s recovery from a one-month low, which in turn weighed on prices of commodities and Antipodeans. Though, EURUSD appears least downbeat amid the hawkish bias of the ECB policymakers while NZDUSD occupies the other end as New Zealand’s foreign trade numbers came in mixed.

Gold stays defensive after reversing from the yearly high on Monday while Brent oil reverses the previous day’s corrective bounce off the lowest levels since late 2021.

BTCUSD and ETHUSD keep the previous day’s pullback from a multi-month high as Coinbase jostles with the US SEC over the regulatory hurdle.

Following are the latest moves of the key assets:

  • Brent oil drops nearly 1.0% to revisit the lowest levels since December 2021, down pressured near $73.00 at the latest.
  • Gold extends pullback from YTD highs, down 0.30% intraday near $1,973 as we write.
  • USD Index rebounds from one-month low, up 0.12% on a day near 103.45 by the press time.
  • Wall Street closed with mild gains but equities in the Asia-Pacific region, as well as shares in Europe and the UK, trade mixed afterward.
  • BTCUSD and ETHUSD print mild losses for the second consecutive day as crypto culls retreat from the highest levels in nine and seven months respectively, near $27,600 and $1,740 as we write.
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Dicey markets in fashion

Although traders seem to push back the earlier pessimism surrounding the banking sector rout, the risk-on mood is absent as pre-data anxiety joins a lack of major events and holidays in multiple markets, like in Japan and Mexico today. With this, the market players seem to consolidate the recent positions even as policymakers discuss covering all US banking deposits under insurance.

As a result, the US Dollar recovered from a multi-day low but fails to tame the Gold price in a major way. The same fuel the USDJPY with mild gains even as EURUSD stays mostly unchanged. That said, Crude Oil can’t overcome the fears of lesser demand due to the looming financial crisis and higher rates at major central banks.

Elsewhere, the leading Cryptocurrencies, namely the BTCUSD and ETHUSD, extend the previous day’s pullback from multi-day tops as fears of another regulatory hustle between the industry players and the US SEC loom.

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

Second-tier data eyed ahead of active calendar from Wednesday

Moving forward, Canada’s headline inflation number and the ZEW sentiment figures from Europe will decorate the calendar. However, those figures are less likely to offer any major moves as traders await this week’s FOMC And BoE, not to forget the March month PMIs. With this, the markets are likely to remain sluggish.

May the trading luck be with you!