Full markets underpin USD rebound ahead of key events, oil reverse from two-month high

US traders’ return after a long weekend triggered the greenback’s corrective pullback from the monthly low, alongside a recovery in Treasury yields. 

The USD rebound, as well as firmer yields, probe market sentiment as downbeat China PMI jostles with covid hopes in Shanghai, as well as expectations of further stimulus from Beijing, to trouble traders during full markets.

Prices of gold and silver remain lackluster whereas Antipodeans struggle for clear directions, staying mildly offered of late. It’s worth noting, however, that Brent oil prices refreshed a two-month high, before snapping an eight-day uptrend as Eurogroup members announced plans to ban 90% of Russian oil imports by the end of 2022.

Further, leading Cryptocurrencies consolidate the biggest daily gains since early March by snapping the three-week uptrend.

Moving on, global traders will have a volatile session as Eurozone inflation and the Biden-Powell meeting looms.

Following is the list of major assets’ latest performances:

• Brent oil reverses from a two-month high after rising for consecutive eight days,  down 2.0% around $120.00.
• Gold pauses two-day uptrend near $1,860, mildly offered of late.
• USD Index rebounds from one-month high, despite recent pullback from 101.80.
• FTSE 100 prints mild gains but DAX and EUROSTOXX50 remain pressured during the initial hour.
• BTCUSD and ETHUSD both lose the upside momentum while dropping back to $31,500 and to the sub-$2,000 region.

Market optimism fades ahead of top-tier data/events

The month-end consolidation in the US Treasury yields joined hawkish comments from Fed’s Waller to renew US dollar strength on Tuesday. Even so, chatters surrounding the US central bank’s action post-September, as well as balance sheet normalization, challenge the greenback bulls. It’s worth noting that the US Dollar Index (DXY) and 10-year Treasury yields brace for the first monthly loss in five and six respectively as the latest US data challenges the Fed’s 50 bps rate hike.

The US dollar rebound weighs on the prices of gold and silver but optimism surrounding China limits the metals’ downside.

Brent oil prices remain volatile, refreshing multi-day high before posting the daily loss, as European sanctions on Russia don’t include the oil imports from pipeline.

Elsewhere, BTCUSD and ETHUSD pause the three-day run-up as US dollar recovery joins Australia’s search for better crypto regulations.

⏫ 🟢 Strong buy: USDCAD, USDRUB and USDCNY

⏬ 🔴 Strong sell: Nasdaq, silver, ETHUSD

⬆️ 🟢 Buy: USD Index, USDJPY

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

EU HICP, Biden-Powell talks eyed

Having witnessed a mixed stat to the full markets, Eurozone inflation data could entertain traders amid hopes of a faster rate hike trajectory by the ECB, starting from July. The recent price data from Germany and France have already flashed the need for hawkish ECB moves and hence today’s EU HICP for May will be crucial to watch.

Following that, US President Joe Biden and Fed Chairman Jerome Powell will discuss how to tackle inflation. The duo will be joined by US Treasury Secretary Janet Yellen to make the event interesting. Should the policymakers agree on harsh measures, the US dollar’s recent run-up could gain momentum and the market sentiment may roil by the end of an upbeat month for equities and riskier assets.

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