The USD/JPY pair experienced a downward shift on Monday amid rising expectations that the Bank of Japan (BoJ) may soon increase interest rates. This speculation has contributed to a lower movement in the currency pair, compounded by a steady US Dollar and thin trading conditions resulting from a US market holiday. The pair witnessed intraday selling pressure, dropping below the 156.00 mark.
Contributing to the decline was the release of upbeat Japanese Machinery Orders data, which added momentum to the yen's strengthening against the US Dollar. The Asian session also saw the AUD/USD pair extend its rebound, climbing above the 0.6200 level. Meanwhile, gold prices reversed a dip from earlier in the Asian session, buoyed by mild US Dollar selling.
The anticipation of potential interest rate hikes by the BoJ is not the only factor impacting the market. Traders are also eyeing broader economic indicators as US President-elect Donald Trump’s inauguration approaches. Optimism prevails as discussions around tax cuts and the future direction of the Federal Reserve loom on the horizon. However, bets that the Federal Reserve will pause its rate-cutting cycle could limit gains in gold prices (XAU/USD), especially amid a generally positive risk sentiment.
Elsewhere, financial markets observed that the People's Bank of China (PBOC) kept the Loan Prime Rate unchanged, indicating stability in its monetary policy approach. Meanwhile, Ripple continued its upward trend, rallying on Monday after breaking out of a symmetrical triangle pattern last week.
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