Concerns over potential global economic repercussions from former President Donald Trump's protectionist policies have bolstered gold, driving its price higher during the Asian session on Thursday. Softer US bond yields and subdued US dollar price action have further supported the precious metal. Meanwhile, rising expectations for a rate cut by the Reserve Bank of Australia (RBA) in February, coupled with China's economic troubles and ongoing US-China trade war fears, pose challenges for the Australian dollar.
In Europe, the European Central Bank (ECB) is expected to cut interest rates by 25 basis points this week. The Governing Council remains focused on supporting activity within the eurozone, as recent data continues to indicate an economy struggling with stagnation. Despite a hawkish pause by the Federal Reserve on Wednesday, which initially favored US dollar bulls, the greenback has struggled to maintain gains. The USD price action remains below the 155.00 mark, and the USD/JPY currency pair has drifted lower for the second consecutive day.
Japan's yen has been underpinned by ongoing bets for additional rate hikes by the Bank of Japan (BoJ). This has contributed to the downward movement in the USD/JPY pair. Solana, a notable cryptocurrency, saw a mild rebound of 3% on Wednesday, adding to the dynamic landscape of currency and asset movements.
The global economic environment remains volatile, with multiple factors influencing currency and commodity markets. The yellow metal continues to shine as investors seek safe-haven assets amidst uncertainty. Meanwhile, the Australian dollar faces headwinds from both domestic monetary policy expectations and external economic pressures.