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MTrading Team • 2023-07-06

USDJPY drops on Japan intervention fears, US dollar’s retreat ahead of top-tier data

USDJPY drops on Japan intervention fears, US dollar’s retreat ahead of top-tier data

Risk appetite remains downbeat on Thursday as markets prepare for the front-line US data while fearing economic slowdown and more US-China tussles. Adding strength to the risk-off mood could be the hawkish bias of major central banks suggesting higher rates despite witnessing downbeat statistics of late.

The sour sentiment weighed on the US stock futures and stocks in the Asia-Pacific region while fueling the Treasury bond yields. However, the US Dollar can’t cheer the risk-off mood and rather prints the first daily loss, so far, in four days. The same joins talks of Japanese government intervention to defend the yen while weighing on the USDJPY, making the pair suffer the biggest daily loss in a month.

Elsewhere, EURUSD and GBPUSD remain sidelined but Antipodeans appear benefiting from the softer USD. That said, Crude Oil dropped but Gold prices recovers whereas USDCHF remains on the way to refreshing yearly low.

Talking about the cryptos, BTCUSD and ETHUSD snap two-day losing streak despite the absence of major positives.

Following are the latest moves of the key assets:

  • Brent oil prints the first daily loss in three by declining towards $76.00 by the press time.
  • Gold price grinds higher past $1,9100, reversing the previous day’s U-turn from a fortnight high as we write.
  • USD Index snaps three-day uptrend with mild losses near 103.30 at the latest.
  • Wall Street closed with minor losses and drowned the Asia-Pacific shares while equities in Europe and UK are down of late.
  • BTCUSD and ETHUSD print minor gains to around $30,800 and $1,930 by the press time.
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Risk aversion prevails but not helping US Dollar…

Irrespective of the global policymakers’ dissent to recession woes, the recently softer economics across the board highlight fears of economic slowdown and challenge the sentiment of late. Adding to this is the heavy outflow of Chinese funds from markets in Beijing to abroad amid fears of a heavy fall, mainly due to fresh cracks in the housing sector and the intensifying US-China tension.

Even so, the central bankers keep defending the broad idea of “higher for long rates” and rather keep bears hopeful, which in turn direct market flows toward the traditional safe-havens like the Gold, bonds and Japanese Yen. US Dollar, however, has to suffer from the recently downbeat data as it prepares for the early signals for Friday’s Nonfarm Payrolls.

On a different page, ETHUSD ignores the selling spree by the Ethereum whales while the crypto market remains slightly optimistic despite looming fears of harsh regulatory measures by the US SEC.

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

US ADP Employment Change, ISM Services PMI in focus

While the Eurozone Retail Sales and final prints of US Construction PMI can entertain the early-day traders in the West, major attention will be given to the early signals for Friday’s top-tier US jobs report. Should today’s US data print a downbeat outcome, the US dollar could pare the weekly gain and flag fears of witnessing a disappointment from the NFP, suggesting more upside for Gold and Antipodeans.

May the trading luck be with you!