Crude Oil extends pullback from monthly high with eyes on US data

Cautious optimism prevailed in the market early Thursday as the US policymakers indirectly signaled the need for monetary policy adjustments, even if the delays in the rate cuts are widely anticipated. Also keeping the traders hopeful are the headlines from China and concerns about witnessing downbeat US data.

Amid these plays, the US Dollar remains pressured and allows the Antipodeans, as well as the commodities, to pare the previous losses.

Among them, USDJPY cheers the Greenback’s weakness the most amid hawkish concerns about the Bank of Japan (BoJ) and upbeat Japan inflation clues. However, prices of EURUSD and GBPUSD lack clear directions due to the mixed economics released during the week from the Eurozone and the UK.

Elsewhere, Gold price printed mild gains while defending the previous day’s rebound from the 100-SMA but the Crude Oil remains pressured amid fears of higher supplies and lesser energy demand.

Wall Street closed positive and allowed the Asia-Pacific shares to edge higher. With this, the US stock futures and the equities in the UK, as well as in Europe, remain mildly bid.

BTCUSD rises to a fresh high since December 2021 and ETHUSD also jumped to the highest level since May 2022 amid optimism among crypto traders.

Following are the latest moves of the key assets:

• Brent oil defends the previous day’s pullback from a seven-week high near $81.50 by the press time.
• Gold price extends recovery from a two-month low, dicey near $1,995 at the latest.
• USD Index keeps pullback from the highest level since mid-November, around 104.60 as we write.
• Wall Street closed with mild gains while the Asia-Pacific stocks edged higher. That said, shares in Europe and the UK print mild gains during the initial hour of trading.
• BTCUSD picks up bids to refresh the multi-month high near $52,500 by the press time while ETHUSD also stays mildly bid to $2,830 as we write.

US Dollar retreats amid mixed clues…

Having witnessed a notable jump in the US Dollar, just after the US inflation data, the Greenback pared gains. Among the key catalysts, US Treasury Secretary Janet Yellen could be held responsible for the US Dollar’s pullback. The policymaker said, “It takes a tremendous mistake to focus on minor fluctuations in the CPI.” Her comments indirectly pushed back hawkish Fed concerns suggesting no rate cuts in 2024.

Apart from that, news from Politico also challenged the US Dollar bulls as it said that Fed Chair Jerome Powell met with Democrats on the House Financial Services Committee just after the release of the strong US inflation data. The news questioned the authenticity of the spike in CPI and Core CPI, as well as the resulting US Dollar rally, as Powell signaled that the data was in line with expectations.

On the same line, Federal Reserve Bank of Chicago President Austan Goolsbee stated that even if inflation comes in a bit higher, it's still consistent with the path, which in turn defends the June rate cut bias of the market and challenges the US Dollar bulls.

Elsewhere, Chinese media cheered a 14% jump in holiday traffic and advocated for positive economic signs due to the same, which in turn offered positive bias about the market and weighed on the riskier assets like the US Dollar.

Alternatively, Federal Reserve Vice Chair for Supervision Michael Barr said that the Fed needs to see continued good data before beginning rate cuts. The policymaker also mentioned that the data suggest the Fed is on a "good path," but still early to say there will be a soft landing.

Meanwhile, geopolitical tensions and firmer yields challenged the US Dollar moves. That said, tensions between Israel and Egypt escalated after Labenon fired rockets toward Israel. In a reaction, Israel braces for attacks on Beirut and dumps peace talks with Cairo. Elsewhere, US House Intelligence Committee Chair Mike Turner warned of "a destabilizing foreign military capability" and has released classified intelligence to all members of Congress, which in turn flagged fears emanating from the US rivals and challenged the optimism that previously challenged the US Dollar bulls.

On a different page, USDJPY ignores Japan’s surprise GDP contraction amid talks of the BoJ’s sooner exit from the easy-money policy. That said, GBPUSD fails to justify mixed UK data as Bank of England (BOE) Governor Andrew Bailey favors the easy-money policies.

Elsewhere, the highest level of the US weekly inventory build in three months joins comments from Saudi Arabia suggesting more supplies of Oil to weigh on the Crude oil prices. Meanwhile, Gold Price defends the previous day’s recovery from the 100-SMA.

• Strong buy: USDCAD, USDJPY
• Strong sell: Crude Oil, US Dollar, GBPUSD
• Buy: BTCUSD, ETHUSD, Nasdaq, Gold
• Sell: DAX, FTSE 100, BTCUSD, AUDUSD, EURUSD

US Retail Sales, manufacturing indices eyed…

Looking ahead, US Retail Sales, Weekly Jobless Claims and regional manufacturing indices from New York and Philadelphia will be in the spotlight. Among them, the US Retail Sales will gain major attention and a likely softness in the outcome could allow the US Dollar sellers to flourish. However, strong prints of the activity gauges and jobless claims’ figures could challenge the greenback bears. Hence, the US Dollar retreat appears elusive and hence traders should keep their long positions of the haven assets.

May the trading luck be with you!