Market mood improves despite hawkish comments from Powell

Oil => The commodity rises towards 85.00
BTC/USD => The cryptocurrency holds $20k
AUD/USD => The pair rises

Oil set for weekly losses

Oil rose 1% higher yesterday but is still on track for losses of over 3% across the week.

This puts oil’s losses over the past ooo weeks at around 10% and oil’s drop from June at 30%. The main fundamental driver of the downtrend has been the fear that as central banks across the globe raise interest rates, growth will slow, hurting the demand outlook for oil.

More recently, COVID lockdowns in China have also weakened the demand outlook and released emergency reserves. The supply side remains tight. However, with increasing concerns over global growth, oil could struggle to rise meaningfully higher. Baker Hughes rig count data is due later.

Where next for oil?

Oil has fallen below trendline support as trades below its 50 & 200 sma.

The 50 sma crosses below the 200 sma in a death cross signal. The RSI is also supportive of further losses. Sellers will look to take out support at 81.00, the weekly low, to open the door to 78.00. On the upside, buyers will be looking for a move over 85.00, the weekly high ahead of 90.00.

BTC/USD rises over 20k despite a hawkish Powell

Bitcoin is managing to hold over support at 20k as investors digest the recent hawkish comments from Federal Reserve Chair Jerome Powell.

Despite the Fed indicating that they will continue hiking rates forcefully until the job is done, BTC/USD has risen around 5% over the past 24 hours. BTC/USD pricing has recently been mirroring that of stocks, which also closed higher on Thursday. As well as reminding the market that history cautions against taking the foot off the hiking pedal too early, Powell also reiterated that the Fed considers crypto regulation important while being mindful of innovation in the sector.

These comments from Powell suggest that more attention to regulation could be coming, particularly given the crypto cases that the SEC has focused on recently, including insider trading at Coinbase and crypto Ponzi schemes. The US is unlikely to be alone here, with increased regulation and legislation also expected in Asia in the coming quarters.

AUD/USD rebound despite weak Chinese inflation

AUD/USD fell 0.3% yesterday after accelerating its selloff following a hawkish message from the Fed.

Federal Reserve Chair Jerome Powell reinforced the central bank’s hawkish stance, lifting expectations that the Fed will continue to hike rates aggressively in September and beyond. Adding to the upbeat mood towards the USD, jobless claims also fell more than expected, highlighting the strength in the labor market. Today the Aussie is powering higher as the market mood improves.

The AUD rally comes as the USD eases lower after a big miss on Chinese inflation, which raises hopes of further stimulus. Looking ahead, attention shifts to US Fed speakers who could provide more signs as to the Fed’s next move.

Support can be found at 0.67 (round number) and 0.6680 (2022 low).

Resistance for the pair can be seen at 0.6890 (50 sna) and 0.70 (round number).