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MTrading Team • 2023-09-11

BoJ concerns weigh on USDJPY as US inflation week begins

BoJ concerns weigh on USDJPY as US inflation week begins

Market sentiment improves on early Monday as traders pare the previous weekly moves ahead of the key US inflation data. Also keeping the market players positive were China inflation data and a pullback in the US Dollar amid a retreat in the yields.

The cautious optimism in the Asia-Pacific markets provides tailwinds to the riskier assets like AUDUSD and Gold while the Western markets may also witness an upbeat start of the week due to the same.

It’s worth noting, however, that the USDJPY is the biggest gainer of the risk-on mood, as well as the broad US Dollar weakness, as Bank of Japan (BoJ) Governor Kazuo Ueda teased the higher rates via weekend comments.

Moving on, Gold Price consolidates the previous week’s losses while Brent Oil edges higher during the second consecutive daily gain.

That said, BTCUSD and ETHUSD fail to cheer the US Dollar’s retreat amid mixed concerns about the crypto regulations and market dynamics.

Following are the latest moves of the key assets:

  • Brent oil remains firmer for the second consecutive day, up 0.35% intraday near $91.00 by the press time.
  • Gold price rises to $1,927 while extending the previous week’s rebound from the 200-DMA.
  • USD Index eases from the highest level in six months, down 0.42% intraday to 104.60 by the press time.
  • Wall Street closed with minor gains but the Asia-Pacific stocks edged higher. That said, equities in Europe and the UK print rise by the press time.
  • BTCUSD remains mildly offered near $26,000 while ETHUSD also drops 0.30% intraday to around $1,610 at the latest.
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An upbeat start to the week…

With the weekend inflation data releases from China joining optimistic comments from US Treasury Secretary Jannet Yellen and BoJ Governor Ueda, market players witnessed a positive start of the week comprising the US inflation, the UK employment data and the European Central Bank (ECB) monetary policy meeting. The same joins the market’s pre-event positioning to defend the risk appetite and weigh on the US Dollar.

China’s headline CPI and PPI data for August allowed officials from Beijing to have a sigh of relief after a heavy workout to defend the economy via multiple measures in the last week.

The same joins comments suggesting a quiet exit of the BoJ from its ultra-easy monetary policy to propel the Japanese Yen (JPY). Apart from that, the recently firmer inflation and employment data from Japan also paved the way for the USDJPY pair’s biggest daily fall in two months.

It should be observed that the risk-on mood also cheered comments from US Treasury Secretary Yellen signaling a soft landing in the world’s biggest economy. However, the economy failed to impress the US Dollar bulls, especially amid a retreat in the US Treasury bond yields and a light calendar.

Elsewhere, crypto traders’ fears escalate as some of the industry majors shift sides and favor the concerns that Bitcoin and Ethereum should be considered fiat currencies.

  • Strong buy: USDCAD
  • Strong sell: ETHUSD, GBPUSD, Gold
  • Buy: USD Index, Nasdaq, USDJPY

Nothing major on the calendar on Monday…

The economic calendar remains light on Monday and may allow traders to extend the initial risk-on mood. With this, the US Dollar could witness further headwinds while prices of Gold and Crude Oil may remain firmer. Additionally, USDJPY is portraying a rising wedge bearish chart formation on a four-hour play (mentioned in our technical analysis), which in turn could entertain the Yen buyers. However, the EURUSD may witness cautious buying due to this week’s US inflation and the ECB Interest Rate Decision.

May the trading luck be with you!