- Palladium rebounds from two-month low, rises towards intraday top of late.
- Vaccine optimism, mixed clues for Fed’s next move trigger DXY pullback from the key upside hurdle.
- Virus woes escalate as markets await FOMC Minutes.
Palladium (XPD/USD) tracks other commodities to the north, up 0.93% intraday around $2,505, as European traders brace for Wednesday’s tasks.
The precious metal dropped to the lowest since June on Tuesday before bouncing off $2,470. While the risk-off mood underpinned the US dollar strength and weighed down the XPD/USD prices, a pullback in the greenback seems to back the latest bounce.
That said, the US Dollar Index (DXY) prints 0.04% intraday losses despite recently picking up bids to 93.10, snapping a two-day downtrend.
Failures to cross the 93.20 technical hurdle could be linked to the greenback gauge’s latest pullback. Also on the same line were the mixed signals over the Fed’s next moves, from the latest Fedspeak and downbeat US Retail Sales. On Tuesday, Minneapolis Fed President Neel Kashkari’s repeat of tapering comments battles Fed Chairman Jerome Powell’s cautious optimism after the US Retail Sales for July dropped below -0.3% expected and +0.7% previous to -1.1% MoM.
It’s worth noting that the worsening virus conditions, especially in the Asia–Pacific region, could keep challenging the palladium buyers. The latest updates suggest that New Zealand’s fresh infections jump to seven from one the previous day whereas Australia’s New South Wales report all-time high covid cases, propelling the national count to the fresh top since August 2020 with near 700 infections. Elsewhere, China’s COVID-19 cases eased but the fears that the US weekly infections will jump to 200,000 and the UK’s highest virus-led death toll since March keep highlighting Delta covid variant woes.
Amid these plays, the US 10-year Treasury yields print mild gains and the US stock futures also reverse the early Asian losses by the press time.
Considering the market’s indecision and the US dollar’s sluggish moves, today’s FOMC minutes will be closely observed for fresh impulse as challenges to tighter monetary policy could favor the XPD/USD buyers.
Technical analysis
Although daily closing below 200-DMA, around $2,580, favors palladium bears, a broad horizontal area comprising multiple levels marked since early January 2021, between $2,530 and $2,460, challenges the quote’s short-term moves.