Markets struggle with slowdown fears ahead of Fed Minutes

Global traders remain cautious as recession woes join pre-event anxiety during early Tuesday. However, China’s readiness to rollout major policy changes, if needed to avoid an economic slowdown, appears to challenge the bears.

The US dollar remains mildly bid during the third positive day, which in turn exerts downside pressure on the commodities and Antipodeans. However, RBA Minutes and China’s efforts manage to propel AUDUSD. Further, UK employment data failed to impress the pair buyers while the EURUSD also fades downside momentum after breaking the key support.

The price of gold and crude oil reverses the China-led gains and tease sellers of late as the softer yields signal the flight to safety amid a grim economic outlook.

Cryptocurrencies remain depressed even as on-chain data and optimism over Ethereum Merge spreads.

Following are the latest moves of the key assets:

• Brent oil bounces off two-month low, up 0.90% near $96.40 by the press time.
• Gold drops for the second consecutive day, down 0.10% near $1,780 at the latest.
• USD Index gains 0.10% as buyers approach 107.00 during the three-day rebound from the monthly low.
• FTSE 100, Eurostoxx and DAX are all printing mild losses by the press time.
• Wall Street closed with mild gains led by Nasdaq’s 0.62% run-up.
• BTCUSD drops back to $24,000 while ETHUSD sellers keep reins below $1,900 at the latest.

Bears sit idle on the table

Escalation fears of economic slowdown join the recently increasing odds of the Fed’s hawkish move to challenge the market sentiment. However, China tried to defend the economy with multiple announcements and a PBOC rate cut, despite being less successful in regaining confidence.

The risk-aversion wave favors the US dollar even as the greenback bulls resist amid a light calendar and cautious mood ahead of Wednesday’s Fed Minutes. The US dollar’s gain fails to impress gold sellers, nor the crude oil traders, as China and Iran play their roles.

AUDUSD benefits from RBA Minutes but GBPUSD fails to cheer a mostly upbeat UK jobs report. Further, EURUSD traces sluggish bond coupons and struggles with the energy crisis. 

Moving on, BTCUSD and ETHUSD fail to justify upbeat on-chain data and optimism over Ethereum Merge as markets return to the grim desk amid a light calendar.

⏫ 🟢 Strong buy: USDJPY

⏬ 🔴 Strong sell: ETHUSD

⬆️ 🟢 Buy: USD Index, USDCAD, Nasdaq

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

US housing, activity data to entertain traders

Although recession and the Fed Minutes are the keywords for the rest of the week, China and second-tier US data may entertain market players in between. Even so, the US dollar bulls can keep reins while equities and crude may resist extending gains. Also, gold could witness further downside should the FOMC Minutes confirm a 0.75% rate hike in September.

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