Markets remain jittery as Fed Minutes, China bolster recession fears

Be it FOMC Minutes or headlines from China, not to forget the ECB policymakers’ comments, all were in sync while suggesting an economic slowdown during early Thursday. The risk-aversion moves also took clues from the RBNZ Governor and Aussie jobs report.

Considering the grim conditions, the US dollar extended the previous day’s upside momentum after witnessing a brief pullback during late Wednesday. The greenback’s strength probed gold buyers, as well as tamed the oil price rebound.

NZDUSD led the bearish run as China’s pessimism joined at-home negatives to weigh on Antipodeans. That said, oil’s mild gains appeared to have limited the USDCAD upside.

BTCUSD and ETHUSD, however, mark another attempt to recover from the one-week low as traders struggle to justify bearish bias after a four-day downtrend.

Following are the latest moves of the key assets:

• Brent oil struggles to remain firm for the second consecutive day, up 0.75% intraday near $95.50 at the latest.
• Gold reverses early-day gains while revisiting the daily lows near $1,762.
• USD Index remains firmer at monthly high, around 106.80 by the press time.
• DAX prints mild gains but Eurostoxx and FTSE 100 remain pressured of late.
• Wall Street closed with losses led by 1.25% downside of the Nasadaq.
• BTCUSD and ETHUSD both print the first daily gains in five as buyers try to defend $23,500 and $1,850 levels.

Pessimism all around!

After multiple days of trying to defend the optimism, global markets turned pessimistic as the Fed policymakers appeared to have known that the path for further rate hikes is short due to the economic fears.

In addition to the Fed Minutes, a fresh jump in China’s covid numbers and doubts that the PBOC won’t be able to save the dragon nation from slipping into recession exerted additional downside pressure on the sentiment. Following that, ECB policymakers also accepted that the grim conditions for the bloc lie ahead.

On a different page, a surprise fall in Australia’s Employment change and RBNZ Governor Adrian Orr’s mixed tone seemed to have been enough to renew the US dollar’s strength following the doubts raised by Fed minutes.

The price of gold, cryptocurrencies and crude oil, however, witnessed gains earlier in the day as traders searched for more clues to defend themselves from the recession woes. Oil prices had the support of inventories and fears that an output crunch may prevail for a bit longer.

⏫ 🟢 Strong buy: USDJPY

⏬ 🔴 Strong sell: ETHUSD

⬆️ 🟢 Buy: USD Index, USDCAD, Nasdaq

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

Risk catalysts in the driver’s seat

With the majority of the key data/events already out and loud, traders may seek qualitative signals like bond moves, recession news and Sino-America tussles for fresh impulse. Even so, the second-tier jobs and activities from the US will decorate the calendar. Above all, risk-aversion may keep the US dollar on the front foot and weigh on the Antipodeans, as well as commodities.

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