Crude oil has remained strong due to declining stockpiles and positive US economic indicators. Market participants have reassessed the level of hawkishness from the Federal Reserve. If the US non-farm payrolls data exceeds expectations, there is a possibility of WTI crude oil prices rising.
The Japanese Yen has been strengthened by an increase in wages in Japan, leading to price setups for the USD/JPY, EUR/JPY, and AUD/JPY. The USD/JPY appears to be overbought, but the uptrend has not yet reversed. The EUR/JPY is maintaining its gains after a recent bullish break. However, the AUD/JPY rally appears to be losing momentum.
Gold prices (XAU/USD) are facing the possibility of a significant decline as the NFP day approaches. The price of gold is currently testing the key psychological level of $1900. It remains to be seen whether the upcoming NFP report will contribute to a sustained downward movement in gold prices. Following the release of ADP and ISM Services data, the US 2Y yield has once again surpassed 5%.
The US has seen positive economic data, particularly in the labor market and services sector, which may lead to a more aggressive approach from the Federal Reserve. The ADP report and ISM services purchasing managers index both showed strength, indicating a robust labor market. However, inflation progress is being challenged by persistent prices in the services sector, causing US Treasury yields to rise. The S&P 500 may face resistance and investor sentiment could change. Asian stocks may open lower due to negative sentiment from Wall Street and concerns about China’s recovery. Japan’s economic calendar showed a surprising increase in average cash earnings, potentially leading to a policy shift by the Bank of Japan. However, real wages are still decreasing and household spending has declined sharply. The USD/JPY is consolidating around an important level and its movement is closely tied to the US-Japan 10-year yield differentials. The USD/CAD has shown resilience.
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