Dollar takes a breather ahead of US consumer sentiment, Wall Street “witching”

Markets look to recover from several risk-off days that benefited the safe-haven dollar. The massive option expires in Wall Street, US Consumer Sentiment and worries about China’s Evergrande are on investors’ minds. Gold licks its wounds, while oil and cryptos hold onto gains.

Flows: The dollar benefited from robust safe-haven demand all week as investors seemed to see a glass-half-empty than one half-full. Some of the pressure on stocks could be related to the upcoming expires of options on Friday, known as “quadruple witching.” Choppy trading is expected.

Gold has been hit hard by the risk-off mood that pushed the dollar and 10-year bond yields higher. XAU/USD is licking its wounds around $1,760 after dipping under $1,750. The precious metal had been hovering around $1,800 for a long time.

Early on Friday, the dollar is off its highs, with GBP/USD recapturing 1.38 and EUR/USD moving back toward 1.18. The Financial Times reported that European Central Bank member Phillip Lane privately signaled that a rate hike is coming in the next few years. The ECB denied the reports.

Upbeat US data: US Retail Sales came out at +0.8% for August compared with a drop of 0.7% projected and showing the strength of the world’s largest economy. Core measures also beat estimates. The Philly Fed Manufacturing Index also surprised to the upside, while the inflation component dropped.

Shoppers’ pulse: The University of Michigan’s preliminary Consumer Sentiment Index for September is forecast to show a minor increase from August’s downbeat 70.3 figure.

Evergrande: China’s second-largest real-estate company remains in dire financial straits. Its woes are weighing on sentiment in Asia.

Cryptocurrencies have been holding onto gains made earlier this week. Bitcoin is trading around $48,000, Ethereum at around $3,550 and Ada is clinging to $2.50.

WTI Crude Oil is trading around $72, consolidating its gains.

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