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MTrading Team • 2022-09-02

Oil entertains bulls during the typical pre-NFP boredom

Oil entertains bulls during the typical pre-NFP boredom

Global markets portrayed the generally experienced pre-NFP consolidation during early Friday, with equities in Asia-Pacific trading mixed but those from Europe printing mild gains at the start. Even so, fears of recession and hawkish central bank actions kept troubling traders of commodities and Antipodeans, while also favoring the Treasury bond yields.

The US dollar, however, remains sluggish around the 20-year high and allowed the rest to consolidate recent losses. Among them, crude oil leads the buyers as talks over supply cuts and a likely delay in the US-Iran oil deal seem to favor energy bulls.

Elsewhere, gold pauses the fall towards the yearly low and the USDJPY stays firmer around renews the highest levels since 1998.

Cryptocurrencies also print mild gains as softer US and market’s cautious optimism, due to downbeat forecasts for NFP, favor the BTCUSD and the ETHUSD buyers.

Following are the latest moves of the key assets:

  • Brent oil snaps three-day losses while bouncing off a fortnight low, up 2.30% around $96.00 at the latest.
  • Gold rebounds from monthly low to print the first daily gains in six days near $1,700.
  • USD Index retreats from a two-decade high, down 0.30% near 109.30 by the press time.
  • FTSE remains indecisive but DAX and Eurostoxx rise nearly 1.0% each at the latest.
  • Wall Street marked a mixed day wherein Dow Jones and S&P 500 printed mild gains but the Nasdaq remained depressed.
  • BTCUSD and ETHUSD both appear struggling around $20,000 and $1,600 respectively.
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Dicey markets in fashion

Apart from the strong fundamental case for oil, the rest on the board seem to portray a sluggish Friday as traders await the US employment data amid mixed feelings and recession woes. While the central bankers have already signaled aggression in rate hikes, the downbeat forecasts for the NFP may allow them to retreat.

Even so, China’s covid woes and doubts over the stimulus, as well as the energy crisis in Europe, keep the optimists away. On the same line could be the downbeat statistics from Australia, New Zealand and China, versus strong US data.

It should be noted that the oil prices cheer the OPEC+ readiness for supply cuts, as well as the doubts that the US-Iran deal will take longer and even if it happens the execution will take additional time.

On a different page, optimism towards Ethereum Merge joins the softer US dollar to underpin the corrective bounce off the leading cryptocurrencies.

⏫ 🟢 Strong buy: USDJPY

⏬ 🔴 Strong sell: ETHUSD

⬆️ 🟢 Buy: USD Index, USDCAD, Nasdaq

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

All eyes on NFP

Although the forecasts hint at softening of the US Nonfarm Payrolls (NFP), the fears of witnessing upside surprise and hawkish Fedspeak are high, which in turn weighs on the market sentiment. Should that happen, the US dollar can quickly refresh the multi-year top and weigh on the commodities, Antipodeans. The Euro, alternatively, may remain less affected amid hawkish bets on the ECB ahead of the next week’s monetary policy meeting.

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