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MTrading Team • 2022-11-22

Oil prices fail to cheer softer US dollar amid demand-supply concerns

Oil prices fail to cheer softer US dollar amid demand-supply concerns

Traders portrayed mixed performance during early Tuesday, after showing a risk-off mood the previous day, as markets await important data/events.

Even so, the US Dollar struggled to defend the latest rebound even as China’s covid woes challenge the greenback bears.

It’s worth noting that prices of Brent crude oil fade the bounce off a 10-month low amid talks surrounding OPEC+ and coronavirus. Gold, on the other hand, stays defensive as Beijing appeared stockpiling the metal and dumping the US Treasury bonds.

NZDUSD appeared to be the biggest gainer among the G10 currency pairs amid hawkish hopes for tomorrow’s RBNZ interest rate announcements. On the other hand, EURUSD and GBPUSD were mostly struggling to benefit from the softer USD amid fears concerning Brexit and the economic slowdown in Eurozone.

BTCUSD and ETHUSD are both down for the third consecutive day as Genesis prepares for bankruptcy.

Following are the latest moves of the key assets:

  • Brent oil fails to extend the bounce off a 10-month low, struggling around $88.00 by the press time.
  • Gold snaps a four-day downtrend near $1,745, up 0.40% intraday as we write.
  • USD Index prints the first daily loss in four while dropping back to 108.00.
  • Wall Street closed with mild losses but stocks in Europe and London appear to push back the bears.
  • BTCUSD and ETHUSD both print three-day south-run around $15,670 and $1,090 in that order.
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Covid woes battle mixed Fedspeak

Although the Fed policymakers’ resistance to accepting aggressive rate hikes kept the US Dollar on a dicey footing, worsening virus woes in China renew fears of another virus-led economic downturn ahead. As a result, the risk appetite remained weak despite the softer US data and mixed Fedspeak.

Additionally, a progressive approach to ease tensions between the US and China by the policymakers joins expectations that this week’s PMIs could suggest easing in activities and allow the Fed to slow down the rate increases. 

With this, the USD probes buyers and the gold price remains firmer, also backed by China’s increase in physical buying of the metal while selling the US bonds. On the other hand, oil prices drop amid fears of more output and less demand, due to OPEC+ and covid catalysts respectively.

Elsewhere, hawkish hopes from the RBNZ countered downbeat NZ trade numbers and propelled the NZDUSD prices.

It should be noted that the fears of more bankruptcies by key crypto exchanges like Genesis and a loan default from Iris seem to have weighed on the BTCUSD and ETHUSD despite the softer greenback.

  • Strong buy: USDJPY
  • Strong sell: ETHUSD
  • Buy: USD Index, USDCAD, Nasdaq, EURUSD
  • Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

Risk catalysts are the key

Given the lack of major data/events, markets are likely to remain pressured ahead of tomorrow’s first readings of PMIs and Fed minutes. Even so, headlines surrounding China’s covid conditions and Fed policymakers’ comments could entertain momentum traders moving forward.

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