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MTrading Team • 2023-10-30

USDJPY traces yields as traders brace for BoJ, Fed and US NFP

USDJPY traces yields as traders brace for BoJ, Fed and US NFP

Market players consolidate the previous moves on early Monday while preparing for a data-full week. Even so, traders remained on edge amid geopolitical fears surrounding the Gaza Strip and mixed feelings about China’s economic recovery.

With this, the US Dollar struggles to find directions and the riskier assets pare previous losses while havens like Gold retreat. Further, US stock futures print mild gains and the Asia-Pacific shares edge higher whereas the US 10-year Treasury bond yields remain pressured after reversing from a multi-year high the previous week.

Elsewhere, firmer Australian Retail Sales joined the softer US Dollar to propel the AUDUSD pair and the news about China’s readiness for more stimulus allowed NZDUSD and other Antipodeans to print mild gains. Additionally, Crude oil remains depressed and USDJPY traces yields after posting the biggest daily loss in nearly a month.

On a different page, BTCUSD and ETHUSD print minor losses after posting stellar gains in the last week.

Following are the latest moves of the key assets:

  • Brent oil drops half a percent to $89.00 after printing the first weekly loss in three.
  • Gold price prints mild losses near $1,995, retreating from a 5.5-month high and probing the three-week winning streak.
  • USD Index remains dicey around 106.60 after a positive weekly close.
  • Wall Street closed mixed and so did the Asia-Pacific stocks. However, equities in Europe and the UK are mildly positive of late.
  • BTCUSD and ETHUSD both pare recent gains around $34,200 and $1,790 as we write.
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Risk aversion fades amid mixed signals

Markets trade mixed on reports that Israel’s ground incursion in Gaza intensified and the US airstrikes blew Iranian military bases around the Syrian border. Alternatively, Tehran’s push for a long truce and Russian criticism of the Western interference in the Middle East seems to trouble the risk-aversion.

That said, Friday’s unimpressive US inflation data joined the previously released upbeat US Q3 GDP to put a floor under the US Dollar, apart from the broad risk-aversion but failed to please the US Dollar bulls amid cautious mood ahead of this week’s top-tier data/events. It’s worth noting that a pullback in the benchmark 10-year US Treasury bond yields also challenges the Greenback buyers.

Additionally favoring cautious optimism are concerns about China’s economic recovery and optimism in India. Recently, Beijing keeps pushing for more stimulus and has witnessed promising economic signals while the festival season in India also underpins the positive sentiment.

Elsewhere, European Central Bank (ECB) policymaker Boris Vujčić defended the ECB’s status quo in the last week while signaling an end to the bank’s rate hike cycle, for now. The same allowed EURUSD bears to keep the reins even as the US Dollar struggled for clear directions.

That said, AUDUSD cheers the US Dollar’s inability to extend the previous week’s gains and strong prints of Australian Retail Sales for September.

Moving on, the monetary policy meetings of the US Federal Reserve (Fed), Bank of Japan (BoJ) and the Bank of England (BoE), as well as the US Nonfarm Payrolls (NFP), will be crucial to watch for clear directions. Furthermore, mixed clues about the geopolitical conditions in Gaza may also trouble the momentum traders and hence a dicey session with the preference for safe havens will be witnessed during the day.

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

German data, BoC officials’ comments awaited

Moving on, Germany’s first readings of the Q3 GDP and October’s inflation data will join speeches from the Bank of Canada (BoC) officials to entertain the intraday traders. However, major attention will be given to the geopolitical headlines and the yields as market players await the key US Federal Reserve (Fed) monetary policy meeting and the US Nonfarm Payrolls (NFP).

May the trading luck be with you!