On Monday the currency markets were in a whirl. In fact, during the Asian trading session, the USD/JPY fell below the mid-143.00s. This deterioration is symptomatic of a perfect storm of adverse economic conditions that have wrecked the Japanese yen’s currency against the US dollar. On the other hand, the AUD/USD cross took advantage of the USD weakness, rising to a multi-day high.
Investors are responding today to a softer risk tone amid an array of other global economic worries. Consequently, the USD/JPY cross still remains under intense pressure, struggling near multi-day lows. Ongoing concerns over US fiscal policy and the re-escalation of US-China trade tensions have increased vulnerabilities. Moreover, increasingly volatile geopolitical risks only serve to compound that uncertainty. Most analysts expect these factors to continue to weigh on the USD/JPY.
“USD/JPY languishes near multi-day low; seems vulnerable below mid-143.00s.” – [“USD/JPY languishes near multi-day low; seems vulnerable below mid-143.00s” – source]
The AUD/USD proved its resilience, extending its positive move, after the strong bullish trend that started during the Asian session. The Australian dollar is rising sharply. This increase coincides with a weakening US dollar and more investors wagering on a possible Federal Reserve rate cut. These expectations have in turn been strengthened by indications that inflation is easing in the U.S.
“AUD/USD builds on its steady Asian session move up amid a weaker USD.” – [“AUD/USD builds on its steady Asian session move up amid a weaker USD” – source]
Though there have been a few positive changes, the prevailing mood in this marketplace is still pretty skittish. The change in risk tone is a potential Australian dollar headwind. This is even more so in light of the Reserve Bank of Australia’s dovish guidance. Traders are deftly dancing through these vagaries. They’re nervously watching important macroeconomic prints from the US this week for new impetus.
Gold prices held positive bias on an intraday basis and there several factors supporting the bids. XAU/USD finds it hard to establish bullish conviction and remains trapped within a multi-day range. Nevertheless, the gold price retains strong bid tone in the Asian session above $3,300 per kg.
“Gold price retains intraday positive bias amid a combination of supporting factors.” – [“Gold price retains intraday positive bias amid a combination of supporting factors” – source]
As traders continue to process and react to these dynamics, plenty are looking toward this week’s economic data that may help provide a clearer directional signal for markets. Currency fluctuations along with key macroeconomic indicators will be a significant factor. In all of this uncertainty, investors will be looking for clarity.