Get your financial pulse on weekly with updates across all major markets, from currencies to natural gas. Stay informed and be ahead of the trends all while gaining valuable insight into today’s ever-changing economic environment!
With the Bank of Japan meeting on Friday and Fed Chair Powell’s testimony expected to drive treasury yields, investors are cautiously watching for any changes in direction with USD/JPY.
On top of this important exchange rate is a resurgent Japanese Yen that began gaining ground late last week; currency traders will be keeping an eye out if there are further developments as the conditions could adversely impact investments involving JPY.
As USD/JPY moves through the week ahead, Federal Reserve Bank Chair Jerome Powell’s semi-annual Monetary Policy Report to the Senate Banking Committee on Tuesday and Wednesday could hold major clues as to the direction of interest rates going forward.
While easing Treasury yields have provided some strength for the Japanese Yen, any hint that Powell is steering away from a hawkish stance would likely kickstart markets potentially resulting in further decreases in yield.
However if the tightening path remains untouched or even strengthened it could send yields rising again.
Predictions are indicating that the Federal Open Market Committee (FOMC) is set to push through a trio of rate hikes over the next few months, with markets expecting an increase totaling at least 25 basis points in March, May and June.
With no major changes expected from the Bank of Japan this Friday, their current policy rate sits at -0.10% and Yield Curve Control (YCC) by targeting a band +/- 0.50% on Japanese Government Bonds out to 10 years remains in place with JGBs persistently trading near its upper boundary.
Kazuo Ueda’s clear continued support for Haruhiko Kuroda marked policies have yet been met with speculation that an adjustment may occur later in the year as was done last December when widening took effect from +/- 0.25%.
With the Bank of Japan’s policies standing idle, investors may look to Jerome Powell and Federal Reserve strategies as their primary support for USD/JPY this week.
Key economic indicators from both sides will be coming out; US Jobs numbers and Japanese GDP figures could prove game-changing if market turbulence ensues.
USD/JPY Chart
Natural Gas Updates
Last week brought exciting news to the natural gas industry, as prices soared to their highest levels in months. This provides a tantalizingly bullish outlook for the near future; however, it will likely take more than this burst of energy before we see an upending of a long-term bearish trend.
Last week, natural gas prices skyrocketed by nearly 20% in a stunning 5-day rally – the strongest seen since mid-July.
Prices managed to find support just below March’s low of 2.422 and are now aimed towards December 2021’s 3.536 mark; an important milestone that could signify resistance ahead and maintain bearish sentiment overall .
Natural gas prices are eagerly making their way up towards the key 23.6% Fibonacci retracement level and 50-day SMA, with a promising breakout above the 20-day Simple Moving Average in play.
If successful resistance is cleared at this level, there’s potential for further growth toward 4.1203 before running into a long term August falling trendline; otherwise we could witness another turn lower back to February low levels at 1.967.
Natural gas is trading within the constraints of a bearish Rising Wedge, offering some steam to an otherwise downbeat outlook. If it can keep inside its boundaries, prices could push up towards the January 24th peak at 3.595;
However if this formation breaks down, then we may be looking ahead to renewed losses from late January until mid-February.
Gold Rebound Journey
Gold has experienced a surge of strength over recent days, threatening to break through the crucial resistance and reach for heights it hasn’t seen in years.
If successful, analysts predict XAU/USD could easily soar to 1876! What level will traders need to watch out for as this story unfolds?
Precious metals are shining bright this week, buoyed by US Treasury yields dipping after Atlanta Federal Reserve President Raphael Bostic’s recent “slow and steady” advice. Gold is hoping for an extra shot of enthusiasm in order to continue its rebound journey!
Gold appears to be playing out a remarkable turnaround story as technical charts point towards its potential interim low.
Prices are forming an impressive support base at the convergence of several key factors: August’s high, Ichimoku cloud boundaries, 200-day moving average and resistance-turned-support on 89 day MA – all within range of 1775 to 1810!
Gold is pushing against a crucial resistance point as it attempts to break above February’s horizontal trendline at 1847.
Doing so could lead the way towards an unprecedented movement, where XAU/USD tests its 200-period moving average on the 240-minute chart now standing at around 1876.
To truly overturn this month-long downward pressure however, gold needs to surge beyond its highest peak set earlier this year – when it hit 1891 in the February 9th trading session.
U.S. Employment Figures
Payroll expansion in the US made a slight recoil last month, sliding from 443000 to 215000. However, even with this modest dip unemployment remains near its lowest level since 1970 an impressive 3.5%.
And while economic news has so far been slightly ahead of expectations throughout February’s beginnings, it appears there may be more good fortune on the horizon!
Wall Street Updates
Last week, optimism in the stock markets around the globe sent stocks soaring. Wall Street celebrated a double-digit percentage increase for both the Dow Jones and S&P 500, while European indexes like DAX 40 and FTSE 100 were up by even higher percentages exceeding 2%.
Far east countries didn’t miss out on this trend either; Japan’s Nikkei 225 surged 1.73% and Asian powerhouse Hong Kong soared with their Hang Seng Index rallying an impressive 2.79%.
Even gold prices reached new heights as people made moves away from traditionally risky investments into safe havens such as precious metals all of which showed signs that investors’ confidence was high despite current global events!
Will these bullish patterns persist or turn bearish soon?
Key Events This Week
In the coming week, eyes will be on some influential central banks. The Reserve Bank of Australia (RBA), Bank of Canada (BoC) and Bank of Japan (BoJ)’s decisions are set to shape short-term market movements for their respective currencies Australian Dollar, Canadian Dollar and Japanese Yen.
Additionally, traders await testimony from Federal Reserve Chair Jerome Powell before Congress which could have a significant impact as we’ve seen lately with markets pricing in more rate hikes than previously thought due to signs that inflation might prove stickier than expected.
We’ll round off the week with one last key event: non-farm payroll data release! What exciting developments lie ahead?
Summary
The EUR/USD pairing will remain in the spotlight next week as investors await US Fed Chair Powell’s testimony to Washington lawmakers and a delayed jobs report.
Across the pond, GBP/USD traders should take note of UK GDP figures alongside NFP data from North America. In Australia, China PMI could help reverse AUD/USD’s recent downturn – but is it enough?
All markets are on alert for potential movements ahead!
The economic calendar for the US, Canadian and Australian Dollars is full this week. Investors will be watching to see if another strong jobs report boosts the greenback or whether event risk in Canada halts USD/CAD prices, while AUD/USD may get a boost should Australia’s central bank hike rates.
Sticky price pressures could cause an upward shift in the value of American currency as investors take into account tight labor market trends when predicting Federal Reserve policy decisions.
The US jobs report could bring the incredible surge in S&P 500 and Nasdaq 100 to a halt if expectations are met. Meanwhile, gold continues its impressive upswing following last month’s downfall, with bulls determinedly pushing it above 1833.
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