Rally slows in quiet session, Yen intervention watch begins

Chris Beauchamp IG

Stocks are catching their breath after recent strength, says Chris Beauchamp, Chief Market Analyst at investing and trading platform IG.

Stocks drift in quiet session

With a long weekend ahead of them it was likely that some of the enthusiasm on Wall Street would ebb away, and European markets have followed suit after a very good start to the year for global equity markets. Monday’s wobble around Jerome Powell is long-forgotten, and while earnings season hasn’t delivered any major upside surprises so far, it has done enough to support stocks this week. The focus moves now towards tech stocks, still the major driver of earnings even if their lead has eroded of late.

Markets await yen intervention

It has been a year since USD/JPY was at this level, and investors are on watch for a move by the Japanese Ministry of Finance. The long weekend in the US might provide them with their opening, but caution may yet prevail, especially with a BoJ meeting at the end of the week. While no rate hike is expected, it is a prudent time to signal a faster pace of rate increases. Such co-ordinated action may prove more effective than a one-off ‘shock and awe’ intervention.

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Chris Beauchamp

EUR/USD makes a U-turn, focus on 1.1900

EUR/USD’s recovery picks up further pace, prompting the pair to retarget the key 1.1900 barrier amid further loss of momentum in the US Dollar on Wednesday. Moving forward, investors are expected to remain focused on upcoming labour market figures and the always relevant US CPI prints on Thursday and Friday, respectively.

GBP/USD sticks to the bullish tone near 1.3660

GBP/USD maintains its solid performance on Wednesday, hovering around the 1.3660 zone as the Greenback surrenders its post-NFP bounce. Cable, in the meantime, should now shift its attention to key UK data due on Thursday, including preliminary GDP gauges.

Gold holds on to higher ground ahead of the next catalyst

Gold keeps the bid tone well in place on Wednesday, retargeting the $5,100 zone per troy ounce on the back of modest losses in the US Dollar and despite firm US Treasury yields across the curve. Moving forward, the yellow metal’s next test will come from the release of US CPI figures on Friday.