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MTrading Team • 2023-06-01

USDJPY edges higher as sentiment improves before key data

USDJPY edges higher as sentiment improves before key data

Markets turn mildly risk-positive as hardline US Republicans failed to stop the debt-limit extension deal in the House. Adding strength to the positive sentiment could be the upbeat China activity data and hopes of witnessing a few rate hikes from the major central banks moving forward.

While the slightly upbeat risk profile allowed the US stock futures and yields to rebound, the US Dollar hesitates leaving the bull’s radar ahead of top-tier activity and employment data.

With this, the NZDUSD pair drops the most among the G10 currency pair while USDJPY occupies the second place. Further, GBPUSD is in the third place whereas AUDUSD and EURUSD are together in the fourth rank as traders await the key Eurozone inflation numbers and first readings of May’s PMIs.

Further, Gold prices struggle for clear directions but Crude Oil rises the most in a week while printing the first daily gains in four.

Elsewhere, BTCUSD and ETHUSD extend the weekly fall as the historical cycle joins a decline in mining fees and regulatory woes.

Following are the latest moves of the key assets:

  • Brent oil regains $73.00 during the first positive day in four.
  • Gold price prints mild losses of around $1,955 at the latest.
  • USD Index remains firmer around the two-month high of near 104.50 as we write.
  • Wall Street closed with minor losses but Asia-Pacific shares edged higher while equities in the UK and Europe remains mildly bid by the press time.
  • BTCUSD and ETHUSD drop more than 1.0% to around $26,800 and $1,855 at the latest.
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Cautious optimism it is…

Clearance of the strongest hurdle for the US debt-ceiling bill appears to tame the default woes and join upbeat economic signs from China and the US to underpin the slightly positive outlook on early Thursday. The risk-on mood, however, needs to pass the US data checks to convince the optimists, who in turn can weigh on the US Dollar on confirmation. As a result, traders doubt the latest firmness in the market as the key US data and Senate voting on the measures to avoid default are still left for hearing.

On the other hand, markets are also turning pale as the latest economics aren’t enough to confirm economic recovery, despite offering short-term positives. The same joins cyclical moves in various industries, likely cryptos, to keep the traders directed toward traditional havens like the US Dollar and Gold. It should be observed that some of the central bankers are still holding their hawkish bias for the rates, even if overall consensus suggests nearness to the policy pivot, which in turn prods the optimists.

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

Multiple data, risk events ahead…

Thursday is going to be the most volatile day of the week for the traders as Eurozone inflation and PMI will precede multiple activity numbers from the US and Canada to entertain the traders. Also important will be the weekly US jobless claims and monthly ADP Employment Change, also known as the early signals for the US Nonfarm Payrolls (NFP). Should the scheduled figures manage to please the Fed hawks, the US Dollar will witness the last round of upside boost before a likely consolidation during the policymakers’ stipulated absence from public comments ahead of the June FOMC.

May the trading luck be with you!