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April 6, 2016

Commodity selloff deepens, investors turn risk-averse

Commodity selloff deepens, investors turn risk-averse

Greenback demonstrated moderate gains against overseas majors in Tuesday as investors are now more disposed for safety plays amid commodities downturn. EUR/USD swung in the range of 1.1350 – 1.1400, relatively stable comparing to other major currency pairs. The bias of most traded currency pair is still unclear as traders are trying to guess whether US Dollar has a room for further depreciation on rate hike delays or optimistic economic updates from US give ground to increase bidding on the currency. Minutes from 15-16 March FOMC meeting will probably supply traders with more ideas on further FED actions, but still the report won’t have profound impact on greenback.

GBP/USD decreases as pound can’t get rid of pressure associated with Brexit risks. Major part of UK nation see country independent from European bloc while Premier Cameron tries to urge Britons to vote for saving the union. Online polls carried out by different magazines and online journals like recent The Telegraph poll have marked impact on UK currency.
Soared demand for safe heaven assets amid growing risk-aversion on global markets sent USD/JPY down to the lows of October 2014. The pair slammed seemingly shellproof support of 110 level, hitting new low of 109.95 rebounding to 110.30 on Asian session in Wednesday. In case Oil selloff worsens the pair bears will arguably head the gauge below 110 level.
Swiss Franc continues to gain attention as heaven asset as investors are losing confidence over further growth prospects and opt for reducing their risk exposure in risky assets. The pair has chances to extend declines if rout on equity markets will gain momentum.

Energy market which caved into depression after discouraging message of Saudi Prince tries to find and price in bidding signals, though “big bulls” seems to have left the market and now crude prices have chances to test $35 level again. WTI dropped -0.22% to $36.47 in Asian session in Wednesday, Brent fell 0.31% to 38.30. Wednesday EIA report will probably shore up price if crude inventories report will post declines, though there is no reason for US to decrease imports of cheap Oil.
Gold hit local peak of 1237.40 then retreated to 1231.50, the bidding on precious metal increases.

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