USD: Data risks support Dollar gains – ING

ING analyst Francesco Pesole indicates that reduced expectations for US-Iran talks and increasing oil prices are bolstering the Dollar, with Brent crude oil nearing $107 and equities at risk due to rapidly rising interest rates. He highlights upcoming US consumer confidence and JOLTS data as crucial indicators for Dollar movements.

Brent oil prices surpassed $109 per barrel yesterday (currently $107), causing further setbacks for bond markets. Currently, equities are experiencing some adverse effects but are managing the shock relatively well, though the risks lie in high valuations potentially reaching a breaking point with rapidly rising interest rates, which could lead to significant Dollar gains.

The upcoming US data, specifically September consumer confidence and JOLTS, should begin to reintroduce US economic indicators into the conversation. These figures could help assess the health of the US economy and potentially influence Dollar direction. For the Dollar to experience a decline, there must be stability in the bond markets, which largely depends on oil prices. Unfortunately, recent developments do not bode well for a correction in the bond market. Upside potential for the Dollar remains present, however.

Despite a brief uptick, AUD/USD has reverted to a lower level, trading at nine-week lows below 0.7000 in the European morning on Tuesday. This decline is partly due to the Reserve Bank of Australia (RBA) Governor Michele Bullock's cautious remarks during a press conference. Earlier, the RBA had increased its cash rate to 4.60%, as expected, leaving the possibility of additional rate hikes open.

Meanwhile, USD/JPY struggles to capitalize on the overnight bounce from a one-week low, settling around 157.50 in the Asian session on Tuesday. Concerns about the weakening Japanese Yen have sparked speculation about another potential US-Japan joint intervention, which, combined with a hawkish Bank of Japan stance, supports the Yen and limits the movement of the currency pair.

Rising expectations for Fed rate hikes and oil-driven inflation fears are driving up US bond yields to multi-year highs, keeping the US Dollar near a two-month high and providing support to the currency pair. Gold has struggled to benefit from a modest uptick in Asian trading, hovering near its lowest level since August 4, around $4,100, which it touched the previous day.

The overall bearish fundamental outlook suggests that gold's path remains to the downside. Both Ripple (XRP) and Stellar (XLM) are under pressure as bulls struggle to maintain recent gains. XRP extends its decline below $1.480 after three consecutive losing days, while XLM faces rejection near the $0.234 resistance zone. Mixed outlooks on derivatives and weakening on-chain metrics indicate that bullish momentum for both cryptocurrencies remains fragile, making them vulnerable to further losses.