Recession risk is on traders' minds regarding the US economy

Naeem Aslam Zaye Capital Markets

Cryptos

Bitcoin is holding on to its ground, and its price is still hovering near the 20K, which shows bulls are trying their best to hold the price level. ETH's price action has started to show more encouraging signs as the price of ETH has moved above the 50-day SMA, which means that the bulls may be ready to push the prices higher.

Gold

The precious metal is likely to remain highly volatile as traders will assess the health of the US labour market by looking at the US ADP number, and comments from the FOMC member Mester will also bring higher volatility. Gold prices are under threat, and the odds are high that we may see further weakness in the gold price in the coming days as the traders continue to factor odds of a Fed interest rate hike.

Risk

Recession risk is on traders' minds regarding the US economy, and traders continuously monitor this risk by looking at the US credit spreads. The current corporate spread levels only indicate a chance of 25% of a deep recession, but in reality, we believe that the odds are much higher. There is more than a 60% chance of the US economy falling into recession, given the number of layoffs being announced and hawkish monetary policy, which is prone to killing economic growth.

Author

Naeem Aslam

Zaye Capital Markets

Based in London, Naeem Aslam is the co-founder of CompareBroker.io and is well-known on financial TV with regular contributions on Bloomberg, CNBC, BBC, Fox Business, France24, Sky News, Al Jazeera and many other tier-one media across the globe.

EUR/USD bounces off lows, back to 1.1860

EUR/USD now manages to regain some balance, retesting the 1.1860-1.1870 band after bottoming out near 1.1830 following the US NFP data on Wednesday. The pair, in the meantime, remains on the defensive amid fresh upside traction surrounding the US Dollar.

GBP/USD rebounds to 1.3660, USD loses momentum

GBP/USD trades with decent gains in the 1.3660 region, regaining composure following the post-NFP knee-jerk toward the 1.3600 zone on Wednesday. Cable, in the meantime, should now shift its attention to key UK data due on Thursday, including preliminary GDP gauges.

Gold stays bid, still below $5,100

Gold keeps the bid tone well in place on Wednesday, retargeting the $5,100 zone per troy ounce on the back of humble gains in the US Dollar and firm US Treasury yields across the curve. Moving forward, the yellow metal’s next test will come from the release of US CPI figures on Friday.