AUDUSD benefits from China, Fed concerns to defend its place on bull’s radar

Markets remain cautiously optimistic on early Monday as China continues to take measures to bolster economic growth, amid fears of witnessing a slower rebound. On the same line were headlines suggesting the central bankers’ limited capacity to lift the rates further, even as most of the major central bank officials defend the “higher for longer” phenomenon.

Alternatively, the geopolitical tension between the US and China, as well as fears that China’s self-reliance won’t be enough to defend its economic transition joined the West versus Russia jitters to prod the risk profile.

Even so, the US Labor Day holiday joins a light calendar to enable the market players to consolidate the previous day’s losses against the US Dollar.

That said, New Zealand’s Term of Trade Index fails to inspire NZDUSD buyers amid the start of promotions for the General elections in Auckland but Japan’s Monetary Base allowed the USDJPY to remain pressured. Further, AUDUSD ignores downbeat inflation precursors and company gross operating profits amid firmer employment clues and China-linked optimism.

Elsewhere, crude oil retreat from the yearly low while the Gold Price remains firmer after rising to the highest in a month the previous day.

On the same line, equities in the Asia-Pacific region edged higher but those in Europe and the UK trade mixed.

Furthermore, USDCHF cheers upbeat Swiss GDP while USDTRY fails to benefit from mostly upbeat inflation clues.

It should be noted that the cryptocurrencies trade mixed, edging higher of late, amid the US Dollar’s retreat and cautious optimism among the BTCUSD and ETHUSD traders.

Following are the latest moves of the key assets:

• Brent oil retreats from the yearly high to print mild losses around $89.00 by the press time.
• Gold price prints minor gains around $1,945 after rising in the last two consecutive weeks.
• USD Index pauses the two-day uptrend while declining to 104.10 at the latest.
• Wall Street benchmarks closed mixed and so did the Asia-Pacific stocks, despite China gains. That said, equities in Europe and the UK edge higher by the press time.
• BTCUSD stays depressed at around $26,000 while ETHUSD seesaws near $1,650 at the latest.

China propels risk-on mood

Be it the People’s Bank of China’s (PBOC) heavy FX RRR cut or a slew of measures to cut mortgage rates, not to forget establishing a special cell to promote privatization, Chinese policymakers were on full steam to defend their economy from losing the recovery strength. Also keeping the market sentiment positive were the increasing odds of witnessing a sooner end to the hawkish monetary policy moves from the key central banks, including the US Federal Reserve (Fed), Bank of England (BoE) and the European Central Bank (ECB).

Elsewhere, a light calendar and the US holiday also helped the optimists to pare some of the losses marked after Friday’s mostly impressive US jobs report and ISM Manufacturing PMI.

It’s worth noting, however, that the US-China tussles join the market’s doubts about China’s capacity to defend the economic transition from the COVID prod the risk takers during a sluggish start of the week.

On a different page, BTCUSD and ETHUSD fail to cheer the US Dollar’s retreat even as market concerns are rising that the US policymakers may defend Bitcoin and Ethereum while likely to keep their dissent for other cryptocurrencies in the new regulations.

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

ECB’s Lagarde to entertain traders on US holiday

With the US Labor Day holiday and a light calendar elsewhere, especially after the release of early-day data from New Zealand, Australia, Turkey and Switzerland, market players may witness a dull start to the week. However, a speech from German central bank leader Joachim Nagel and the European Central Bank (ECB) President Christine Lagarde may please the momentum traders. It’s worth noting that the recently mixed US data and easing hawkish concerns about the Fed may allow the Euro to pare recent losses.

May the trading luck be with you!