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MTrading Team • 2022-10-04

Firmer sentiment weighs on US dollar, RBA drowns AUDUSD

Firmer sentiment weighs on US dollar, RBA drowns AUDUSD

The market’s mood remained firmer on Tuesday, extending the previous weekly optimism, as downbeat US data weighed on the US dollar. Also favoring the risk-on mood is the pullback in the US Treasury yields. Persistent recession concerns, however, joined hawkish central bankers to hold optimism with a pinch of salt. With this, the US dollar weakness favored the ex-USD currencies.

Among the major currency pairs, the EURUSD gained the most while the AUDUSD occupied the other end as the hawkish ECB contradicts the RBA’s dovish hike. It’s worth noting, that the commodities and Antipodeans cheered the softer US dollar while equities were mildly positive.

Oil remains firmer amid a softer US dollar and hopes of more supply cuts as OPEC+ canceled October 04 JTC meeting. The price of gold was on the same line as talks of economic recovery, or at least a pause in the pessimism, favored the yellow metal buyers.

Elsewhere, BTCUSD and ETHUSD extend the week-start rebound to approach the short-term key resistance.

Following are the latest moves of the key assets:

  • Brent oil remains firmer above $90.00, printing two-day run-up with 0.70% intraday gains as we write.
  • Gold rises to the highest levels in three weeks, up 0.60% near $1,710 at the latest.
  • USD Index renews one-week low around 111.00, down half a percent by the press time.
  • FTSE gains over 1.0% on a day but Eurostoxx and DAX are both up nearly 1.5% intraday by the press time.
  • Wall Street closed with notable gains led by Dow Jones’ 2.59% upside.
  • BTCUSD remains firmer around $20,000, up 1.50%, whereas ETHUSD rises 1.85% while trying to regain $1,350 level.
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Risk-on extends!

Softer US ISM Manufacturing PMI joins the UK’s efforts to tame recession woes, as well as downbeat yields, to help witness a positive start to the key week. It’s worth noting, however, that the central bank speakers remained hawkish and tried to challenge the risk-on mood.

AUDUSD is often considered as the risk barometer but the RBA’s disappointment, via a 0.25% rate hike versus market expectations of a 0.50% move, weighed on the Aussie pair. On the other hand, the British government’s moves to reverse the last week’s disappointment, via a short-term fiscal budget, propel the GBPUSD.

Oil prices remain firmer as OPEC+ cancels JCT, highlighting tomorrow’s final verdict amid hopes of more supply cuts. Further, Gold benefits from the US dollar weakness and cautious optimism in China, one of the world’s biggest metal consumers.

BTCUSD and ETHUSD consolidate recent losses during the second positive day amid hopes of more inflow at lower levels, as well as backed by the softer US dollar and broad risk-on mood.

⏫ 🟢 Strong buy: USDJPY

⏬ 🔴 Strong sell: ETHUSD

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

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

US Factory Orders, Fed policymakers’ speeches in focus

Having witnessed an active session during the early hours of Tuesday, global markets may remain sluggish amid a lack of major data/events. However, the US Factory Orders for August and speeches from multiple Fed policymakers could entertain the momentum traders. That said, the US dollar’s recent hesitance in declining further below the one-week low teases recovery ahead of the key US jobs report, up for publishing on Friday. It should be noted that the latest weakness in the US data has weighed on the greenback and can continue doing the same if the scheduled statistics disappoint the USD bulls.

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