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MTrading Team • 2024-03-27

USDJPY rises to multi-year high on BoJ concerns and firmer US Dollar

USDJPY rises to multi-year high on BoJ concerns and firmer US Dollar

Early on Wednesday, the market’s indecision joins mostly upbeat US data and the hawkish Fed concerns about keeping the Greenback firmer. However, traders’ consolidation ahead of this week’s top-tier data and widely accepted concerns about the Fed rate cut in June challenge the USD bulls.

With this, the EURUSD and GBPUSD remain pressured while the US Dollar Index (DXY) hesitantly extends the previous day’s recovery. Further, USDJPY defends the week-start recovery to the highest level since 1990 whereas AUDUSD and NZDUSD bear the burden of the firmer US Dollar and the cautious mood.

Moving on, Gold price struggles to extend the previous two-day recovery while crude oil remains pressured after reversing Monday’s gains amid downbeat energy concerns.

Elsewhere, BTCUSD prints a five-day uptrend while ETHUSD picks up bids to reverse the previous day’s pullback from the weekly high.

Following are the latest moves of the key assets:

  • Brent oil extends the previous day’s losses to $85.50, down 0.50% intraday by the press time.
  • Gold price lacks clear directions around $2,177, probing the two-day winning streak as we write.
  • USD Index remains firmer for the second consecutive day near 104.35-40 at the latest.
  • Wall Street closed with minor losses and the Asia-Pacific stocks also edged lower. Further, the shares in Europe and the UK print minor gains during the initial hour.
  • BTCUSD prints a five-day uptrend near $70,300 while ETHUSD grinds higher past $3,600 to reverse the previous day’s pullback from a one-week high.
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Mixed markets allow US Dollar to stay firmer…

The previous day’s firmer prints of the US Durable Goods Orders jostled with a softer CB Consumer Confidence and Dallas Fed Manufacturing Index, as well as Richmond Fed Manufacturing Index, to confuse the US Dollar traders ahead of US Q4 GDP and Core PCE Price Index, also known as the Fed’s preferred inflation gauge. However, the risk-negative headlines underpin the US Dollar’s strength. That said, trade war concerns also challenge the market sentiment and put a floor under the US Dollar. China filed a complaint to the World Trade Organization (WTO) against the US subsidies on electric vehicles (EVs) and the early chatters are in favor of the Dargon Nation’s victory. However, the case is likely to stretch for a long time and the US can call the national security issues to defend themselves. On the other hand, European authorities are planning back-dated tariffs on Chinese EVs and hence Beijing is struggling in a two-sided trade war that it is less likely to overcome.

Elsewhere, the geopolitical woes in the Middle East, Russia and Ukraine also challenge the market’s optimism and allow the USD buyers to remain hopeful.

Given the US Dollar’s strength and the market’s anxiety, the Gold price remains dicey as the upbeat clues from China put a floor under the precious metal.

Earlier in the day, upbeat prints of China’s industrial profits and expectations of witnessing more stimulus joined the market’s peace with the Fed’s June rate cuts to keep the Gold buyers hopeful. Earlier in the day, China’s Industrial Profits for the January-February period rose 10.2% versus the -2.3% previous readings marked during the same time last year.

Moving on, Bank of Japan (BoJ) Monetary Policy Board Member Naoki Tamura said, “Based on the current economic, price outlook, BOJ is likely to maintain accommodative monetary conditions for the time being.” The same joins the firmer US Dollar to propel the USDJPY price toward the highest level since the mid-1990s.

Australia’s Monthly Consumer Price Index (CPI) for February reprinted 3.4% YoY figures versus 3.5% expected while the Core CPI inched up from 3.8% to 3.9% YoY. Further, the Monthly CPI rose to 0.5% MoM from 0.4%.

New Zealand’s Treasury cuts its inflation forecast for the Financial Year (FY) 2024 to 3.3% from 4.1% anticipated previously. Further, a half-yearly update also anticipated annual GDP growth for FY 2024 at 0.1% versus the previous forecast of 1.5%.

Crude oil reversed the week-start gains after the private Oil inventory survey from the American Petroleum Institute (API) marked a heavy build of 9.337 million barrels in the weekly stockpile versus the previous draw of 1.519 million barrels and the market forecast of -1.3 million barrels. Apart from the weekly inventories, a report suggesting no change in the OPEC+ output until June also weighed on the Oil price. The same challenges the weekend news suggesting Russia’s push for output cuts to the domestic energy companies to match the cartel’s production cut targets.

  • Strong buy: USDCAD, USDJPY
  • Strong sell: Crude Oil, US Dollar, GBPUSD
  • Buy: BTCUSD, ETHUSD, Nasdaq, Gold

Sluggish day ahead…

A lack of major data/events on Wednesday will join the cautious mood ahead of Thursday’s final prints of the US Q4 GDP and Friday’s Core PCE Price Index to restrict the market moves. The same could allow the US Dollar bulls to keep the reins and exert downside pressure on the commodities, especially Gold and crude oil.

May the trading luck be with you!