USDJPY ignores US Dollar rebound to print three-day losing streak on upbeat Japan data

Despite the weekend political setback in France, the global markets appear mostly dicey early Monday as traders await this week’s key data/events amid recently downbeat concerns about the Federal Reserve’s (Fed) rate cuts and political environments in the US. It’s worth noting that mixed headlines from Russia and China join the cautious mood and put a floor under the US Dollar Index (DXY) after it dropped the most in 10 weeks.

That said, Gold Price retreats from a six-week high, after rising the most since early April, whereas Crude Oil also extends the previous day’s pullback from an 11-week high.

EURUSD began the week with a downside gap on French news after marking the biggest weekly gain of 2024 but USDJPY remains pressured for the third consecutive day on upbeat Japan data and hawkish hopes from the Bank of Japan (BoJ). That said, GBPUSD rose the most in 10 weeks in the last before easing from a one-month high as the UK’s new government flexed muscles to control the British economy.

AUDUSD and NZDUSD both bear the burden of China-linked woes and the US Dollar’s consolidation following a hefty rise every week. However, USDCAD struggles to defend the previous day’s rebound from important technical support, mainly due to the downbeat Canada jobs report and Crude Oil’s retreat.

Elsewhere, BTCUSD and ETHUSD failed to cheer the US Dollar’s fall and marked the biggest weekly loss since November 2022 as crypto traders bear the burden of Mt. Gox’s BTC repayments that bolstered Bitcoin supplies and spired into other altcoins like ETH.

Following are the latest moves of the key assets:

• WTI Crude oil extends the previous day’s retreat from a multi-day high by declining around 0.70% intraday to $82.60 at the latest.
• Gold reverses from a six-week high, down 0.60% intraday to $2,377 by the press time.
• The USD Index snaps a seven-day losing streak by bouncing off a three-week low to 105.00 as we write.
• Wall Street closed with mild gains but the Asia-Pacific shares lack upside momentum. That said, equities in Britain and Europe trade mixed during the initial trading hour.
• BTCUSD and ETHUSD both drop nearly 0.5% each to $55,600 and $2,915 respectively at the latest.

The US Dollar licks its wounds…

Be it Friday’s higher unemployment rate and softer wages or Fed Chair Jerome Powell’s hints of rate cuts and doubts about the US soft landing, the US Dollar Index (DXY) had to bear the burden of all to post the biggest weekly fall in 10 weeks. Apart from the obvious economics, the political jitters surrounding hardships for US President Joe Biden to run for elections also exert downside pressure on the Greenback’s gauge versus six major currencies. It’s worth noting that the surprise victory of France’s leftist coalition, the New Popular Front (NFP), joined the risk-negative headlines from Russia, China, and the Middle East to allow the DXY to lick its wounds. Also favoring the Greenback to pare recent losses is the cautious mood ahead of this week’s top-notch data/events including Fed Chair Jerome Powell and Treasury Secretary Janet Yellen’s bi-annual Testimonies, as well as the US Consumer Price Index (CPI) for June.

The US Dollar’s fall allowed EURUSD to ignore downbeat Industrial Production from Germany and Eurozone Retail Sales, not to forget the European Central Bank (ECB) officials’ failure to reject rate cut bias. That said, the Euro marked the biggest weekly gain of 2024 before retreating from a one-month high on political setbacks in France suggesting a hung parliament.

On the other hand, GBPUSD appeared better placed to cheer the US Dollar weakness when the Labour Party got a clear majority to rule the government in national elections. However, doubts about the new government’s tactics, as they’ve been off the board in the last 14 years, tested the Cable buyers amid recently softer data from the British Chamber of Commerce (BCC) and Halifax.

USDJPY remains pressured for the third consecutive day after upbeat prints of Japan’s Current Account and Trade Balance data, as well as the Eco Watchers Survey. Also exerting downside pressure on the Yen pair is the Bank of Japan’s (BoJ) quarterly economic assessment of Japan’s nine regions in the Sakura Report. That said, the report maintained April’s forecasts for five regions while raising for two and cutting estimations for the rest two regions.

AUDUSD retreats from a six-month high amid downbeat Aussie housing data and doubts about China’s economic growth, as well as the Reserve Bank of Australia’s (RBA) rate hike chatters. Meanwhile, NZDUSD follows suit without any major catalyst ahead of Wednesday’s Monetary policy meeting announcements of the Reserve Bank of New Zealand (RBNZ).

Further, USDCAD dropped in the last four consecutive weeks amid firmer prices of Crude Oil, Canada’s key export, and upbeat Canada inflation data. However, Friday’s softer prints of the Employment Change and higher Unemployment Rate triggered the Loonie Pair’s rebound from an upward-sloping support line from late January, especially amid a pullback in Crude Oil prices.

WTI Crude Oil drops for the second consecutive day as a growing political dilemma in the West joins indecision about China’s economic transition. Also challenging the Oil buyers are talks of the Gaza ceasefire. Elsewhere, Gold Price eases from the highest level since late May after reports revealed that the People’s Bank of China (PBoC) bought zero gold for the second consecutive month in June.

• Strong buy: USDCAD, USDJPY, US Dollar, Silver
• Strong sell: AUDUSD, NZDUSD, GBPUSD
• Buy: BTCUSD, ETHUSD, Nasdaq, Gold, DJI30, USDCNH
• Sell: DAX, FTSE 100, EURUSD, Crude Oil

Nothing major for intraday but the weekly calendar appears crucial…

Looking ahead, Eurozone Sentix Investor Confidence for July will join the newly appointed UK Chancellor Rachel Reeve’s first speech to entertain intraday traders. However, a cautious mood ahead of Tuesday’s Testimonies from Powell and Yellen, as well as Thursday’s US Consumer Price Index (CPI) for June, may restrict the market’s reactions to the events and help the US Dollar to pare recent losses. Elsewhere, RBNZ, the UK’s monthly data dump, and China inflation will also be important to watch during the week. Additionally, political jitters in the Eurozone and the UK, as well as the US, will be interesting and can challenge the previous optimism of the market players, allowing the US Dollar to recover.

May the trading luck be with you!