The US Dollar is experiencing broad softness as a recent sell-off in US Treasury yields impacts the major currency. This development has led to the USD/JPY pair falling, with expectations it may test the 153.00 level during Asian trading on Wednesday. Additionally, disappointing data from China's Caixin Services PMI has further dragged down the pair, while the Chinese Yuan continues to slump.
The divergence in monetary policy between the Reserve Bank of Australia (RBA) and the Federal Reserve (Fed) is adding pressure to the USD/JPY pair. Meanwhile, persistent fears surrounding the US-China trade war are also contributing to the pair's downward trajectory. In Asian trading on Wednesday, the AUD/USD pair remains on the back foot, hovering near the 0.6250 mark.
In a related development, President Donald Trump has agreed to delay the imposition of 25% tariffs on Canada and Mexico for one month. This decision follows a conversation with his counterparts on Monday, easing some immediate trade tensions.
In Japan, growth in real wages in December has fueled speculation that the Bank of Japan (BoJ) might further hike interest rates. This growth is providing support to the Japanese Yen, adding another layer of complexity to the currency dynamics at play.
Amidst these fluctuations in the currency markets, gold prices are maintaining a record-setting rally, trading near $2,850 early Wednesday. Traders are focusing on upcoming US private sector employment data and US-China trade talks, which are expected to influence gold price action in the coming days.