USDJPY traces recovery in yields to snap three-day losing streak

The market sentiment dwindled after weekend news suggested increasing bombarding of Israeli militaries in Gaza. On the same line were reports that Saudi Arabia cut oil prices for Europe and raised them for the US. These kinds of news flagged escalation of the geopolitical tension and put a floor under the US Dollar. However, a light calendar and a lack of major macro updates offered a quiet start to the week.

Even so, the yields pare weekly loss and joined the Bank of Japan (BoJ) Governor Kazuo Ueda’s defense of the easy-money policy to trigger the USDJPY pair’s rebound. That said, EURUSD and GBPUSD remain lackluster while Gold remains pressured while Crude Oil prints the first daily gain in three amid mixed concerns.

Elsewhere, BTCUSD and ETHUSD edge higher despite posting mild losses on the day. That said, the ETHUSD snaps a three-day winning streak while the former remains lackluster at the highest level in a year amid fresh talks about the spot ETF approvals in Hong Kong and China.

Following are the latest moves of the key assets:

• Brent oil rises half a percent to pare the previous day’s losses around $86.50.
• Gold price prints the first daily loss in three near $1,985 at the latest.
• USD Index licks its wounds at the lowest level in seven weeks, dicey around 105.10 by the press time.
• Wall Street closed positive and so did the Asia-Pacific stocks. However, equities in Europe and the UK begin the day on a dicey floor.
• BTCUSD and ETHUSD both pare recent gains around $34,900 and $1,880 as we write.

US Dollar licks its wounds, Yen eased on dovish BoJ concerns

The US Dollar Index (DXY) remains pressured at the six-week low whereas the stock futures appear dicey. That said, the Asia-Pacific shared edge higher amid hopes of witnessing no more rate hikes from the Fed and a likely end of the geopolitical tensions even as the latest signs haven’t been so promising.

October’s US employment report & PMI data from the ISM and the S&P Global drowned hopes of witnessing one more Fed rate hike in 2023 and pushed the US Dollar towards posting the biggest weekly loss in nearly four months. That said, the headline Nonfarm Payrolls (NFP) marked the lowest addition to the private workforce with 150K figure versus 178K expected and a revised down prior figure of 297K. Further, the Unemployment Rate rose to 3.9% from 3.8% whereas the Average Hourly Earnings eased to 4.1% from 4.3% previous readings. Additionally, the ISM Services PMI also flashed a five-month low of 51.8 compared to the market consensus of 53.0 and 53.6 reported last month. It should be noted that the final readings of the S&P Global Services and Composite PMIs also softened to 50.6 and 50.7 from 50.9 and 51.0 initially estimated.

Not only the data, but the Fed talks also inspired the US Dollar bears as Atlanta Federal Reserve President Raphael Bostic said that he may support holding rates for about 8 to 10 months. On the same line, Federal Reserve Bank of Richmond President Thomas Barkin mentioned it was welcome to see lessening pressure in jobs data and noted that the labor market was in better balance while adding Fed has more data to see before the next rate decision.

Additionally weighing on the US Dollar could be the likely humanitarian ceasefire at Gaza as the West pushed Israel towards helping human corridor during its ground invasion.

• Strong buy: USDCAD
• Strong sell: ETHUSD, GBPUSD, Gold
• Buy: USD Index, Nasdaq, USDJPY
• Sell: DAX, FTSE 100, BTCUSD, AUDUSD, EURUSD

Nothing major ahead…

Apart from a few final readings of the October month’s activity data from the Eurozone, the economic calendar appears pretty quiet on Monday. However, the market’s preparations for this week’s speech from Fed Chair Powell and China inflation data could allow the US Dollar to pare the recent weekly losses, the first in four, which in turn could exert downside pressure on commodities and Antipodeans.

May the trading luck be with you!