Risk sentiment improving

Frank Walbaum

lmportant news this week:

Wed, 29th Jul, 03:30 CET AU Consumer Price Index.
Wed, 29th Jul, 20:00 CET US FOMC Interest Rate Decision.
Thu, 30th Jul, 13:00 CET UK BoE Interest Rate Decision.
Thu, 30th Jul, 14:30 CET US PCE Price Index.
Fri, 31st Jul, tentative JP BoJ Interest Rate Decision.

Risk-on sentiment returns as Dollar Weakens

Risk appetite is improving across global markets as the US Dollar continues to soften. The US Dollar Index (DXY) remains above the psychologically important 100 level but is drifting lower, suggesting the recent Dollar rally may be turning into nothing more than a technical retracement. Whether the Dollar can hold this support will likely determine the next move across FX and equity markets.
Equities have started the session on a positive note, with the S&P 500 extending gains above its 50-day moving average on the daily chart, reinforcing the medium-term bullish outlook. The Nasdaq is also recovering but still trades below its own 50-day average, making it the weaker of the two major US indices. Precious metals are benefiting from the weaker Dollar, with both Gold and Silver moving higher. In FX, the Australian Dollar is one of the strongest performers, breaking above an important technical resistance level and signalling improving global risk sentiment. The Euro and British Pound are also firmer against the Dollar, while cryptocurrencies continue to recover. Ethereum is leading gains in the digital asset space, outperforming Bitcoin as investor confidence gradually returns.

Market talk

Geopolitical tensions have eased after reports that the US and Iran have paused military strikes around the Strait of Hormuz, helping to improve overall market sentiment. The reduced risk of immediate supply disruptions has supported the broader risk-on environment, encouraging investors to move back into equities, commodity currencies, and cryptocurrencies. The key question now is whether the recent Dollar weakness develops into a broader downtrend or proves to be only a temporary correction. As long as the DXY remains above the 100 level, the possibility of a renewed Dollar rebound cannot be ruled out, making this one of the most important technical levels to watch in the days ahead.

Tendencies in the markets.

Author

Frank Walbaum

AUD/USD rises to 0.6950 as USD slips on Fed's Warsh

AUD/USD regains traction and extends the bounce toward 0.6950 in the Asian session on Friday. Fed Chair Warsh's comments reinforce the selling pressure on the US Dollar, allowing the pair to stretch higher. Warsh said that he remains committed to delivering price stability without giving away anything on future interest rate path.

USD/JPY falls in symc with USD, gives up 158.00 after Warsh's speech

USD/JPY has come under fresh selling pressure and gives up 158.00 in the Asian session on Friday amid the emergence of fresh US Dollar selling. Fed Chair Warsh's non-committal commentary on the future tightening path, weighs on the US Dollar and the pair.

Gold looks vacillating above $4,150

Gold alternates gains with losses below the key $4,200 mark per troy ounce on Friday. The yellow metal’s irresolute price action comes in response to a modest pullback in the US Dollar and a tepid recovery in US Treasury yields across the board.

Bitcoin steadies at $82,000: The five forces crushing the Uptober rally

Crypto markets have remained under pressure so far in October, with Bitcoin (BTC) sliding below $80,000 earlier this week before recovering to around $82,000 on Friday, as macroeconomic headwinds and cooling demand weigh on the market.

The Fed just got a second hot inflation number. Here's what the diesel signal is really saying

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Everyone's dumping Gold after hot US inflation. Here's why $4,100 could be a floor, not a cliff

Gold (XAU/USD) is recovering from a sharp sell-off triggered by hotter-than-expected United States (US) inflation data released on Wednesday. The precious metal briefly plunged toward $4,073 as investors increased their bets on further Federal Reserve (Fed) interest rate hikes before recovering as US Treasury yields and the US Dollar (USD) reversed their initial gains.