The US Dollar is facing softness in the currency markets as a recent sell-off in US Treasury yields impacts its strength. In Wednesday's Asian trading, the USD/JPY pair is witnessing a decline, with analysts suggesting it may test the 153.00 level. This comes amid a backdrop of disappointing economic data from China and ongoing concerns over the US-China trade war.
China's Caixin Services PMI fell short of expectations, causing the Chinese Yuan to slump further. Meanwhile, the policy divergence between the Reserve Bank of Australia (RBA) and the Federal Reserve (Fed) is also influencing market movements. The AUD/USD pair remains under pressure, trading near 0.6250 as traders navigate the complexities of Asian trading on Wednesday.
Adding to the mix, US jobs data is now coming into focus as investors await further clues on economic health. In a related development, President Donald Trump has agreed to delay imposing 25% tariffs on Canada and Mexico for one month. This decision followed a conversation with his counterparts on Monday, signaling a potential easing of trade tensions, albeit temporarily.
In Japan, the economy shows signs of resilience with growth in real wages recorded in December. This growth provides support to the Japanese Yen, which could prompt the Bank of Japan (BoJ) to consider further rate hikes. The Yen's strength contrasts with the broader challenges faced by other major currencies amid global economic uncertainties.
Meanwhile, gold continues its impressive rally, holding near a record-setting $2,850. Traders are eagerly awaiting US private sector employment data and further developments in US-China trade talks to gauge the future direction of gold prices.