Commodities, Cryptos, and FX: King dollar sends risky assets lower

Oil

Crude prices tumbled from a 10-month high as the dollar rebound resumed following sluggish US economic data that painted a darker short-term outlook for the world’s largest economy.  Oil needed a big catalyst to keep the recent rally going so energy traders didn’t need much to head for the sidelines.  Heading into a three-day weekend in the US, now was a great time to take off some risk, which is also adding to today’s slide in oil prices.

The dollar rebound could last a little longer as Congress will have the standard back-and-forth over stimulus negotiations.  Stimulus uncertainty should keep commodities under pressure as risk aversion flows will boost the greenback.    

Gold/FX

Gold was supposed to have an easy end to the week after prices were supported on both Fed Chair Powell’s comments on tapering and on Biden’s announcement of a larger-than-expected COVID relief bill.  The overcrowded bearish bets against the dollar still needs to get undone.  It seems last week’s dollar rebound was just the beginning.      

Gold has a strong case to rise higher, but it won’t shake off a surging dollar.  The dollar seems poised to make a big run here as we brace for a few weeks of stimulus debate in Washington DC.  Gold could soften towards $1800 and if buyers don’t emerge, it could get ugly fast.  With many Americans taking advantage of the three-day weekend, gold could have some wild swings.  

Bitcoin

Bitcoin is the riskiest asset and is one of the first things sold when we have a strong move in the dollar.  Bitcoin could get in trouble if this dollar rally accelerates.  The $30,000 level could easily get tested  for Bitcoin if the greenback pushes higher.  

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