Forex Today: Market turbulence dissipates on further Yen selling

Pablo Piovano FXStreet

Another positive session saw the Greenback advance to weekly tops, helped by the extra depreciation of the Japanese currency and the unabated march north in US yields across the spectrum.

Here is what you need to know on Friday, August 9:

The USD Index (DXY) climbed to four-day highs beyond 103.50 in the context of higher yields globally and dominating risk-on sentiment. The US docket will be empty on August 9.

EUR/USD clinched its third consecutive daily retracement, breaking below the 1.0900 support in response to extra gains in the US Dollar. Germany’s final Inflation Rate will be the only scheduled release on the euro calendar on August 9.

GBP/USD rapidly set aside an early drop to multi-week lows near 1.2660, reclaiming the area above 1.2700 the figure amidst the prevailing appetite for the risk complex. There will be no data releases in the UK on August 9.

USD/JPY extended its weekly advance following further selling of the Japanese yen and the persistent risk-on mood among traders. On August 9, there will only be a short-term bill auction.

An extra rebound lifted AUD/USD to new two-week peaks near 0.6580, up for the third consecutive day on Thursday. The NAB Business Confidence index is only due on August 9.

WTI prices rose further and clinched weekly tops past the $76.00 mark per barrel, helped by persevering geopolitical concerns in the Middle East.

Gold prices advanced to three-day highs near $2,425 per ounce troy following hopes of a 50 bps rate cut by the Fed beyond the summer. Silver rallied more than 3 % to revisit the $27.60 region per ounce, or multi-day highs.

Author

Pablo Piovano

FXStreet

Born and bred in Argentina, Pablo has been carrying on with his passion for FX markets and trading since his first college years.

AUD/USD flirts with 0.7000, lowest since early August amid bullish USD

AUD/USD hits a fresh low since early August during the Asian session on Friday and looks vulnerable near 0.7000 after breaking below the 200-day SMA overnight. Against the backdrop of the hawkish Fed, a two-day rally in oil prices revives inflation fears and continues to push US bond yields to multi-year highs. Adding to this, geopolitical risks lift the US Dollar to a two-month high, overshadowing RBA rate hike bets and weighing on the pair.

USD/JPY pulls back from three-week high after failing near 159.00

USD/JPY edges lower during the Asian session on Friday, stalling its recent strong move to a three-week high of 159.00 as Japanese Yen bears turn cautious amid intervention fears. Meanwhile, the US Dollar retains a strong bullish undertone as the Fed's hawkish outlook and oil-driven inflation fears continue to push US bond yields to multi-year peaks. Furthermore, the BoJ's dovish rate hike last week might cap JPY and support spot prices.

Gold treads water below $4,300

Gold grabs some buying attention and advances marginally at the end of the week, partially retracing the weekly decline, although it is still navigating below the key $4,300 mark per troy ounce. The fresh selling bias on the Greenback and the modest decline in US Treasury yields appear to support the humble advance in the precious metal.

Week ahead: Rate hike bets face a crucial data week

Despite the solid drop from the mid-September high, oil prices remained in the driver’s seat for another week, setting the tone in financial markets. Six months have passed since the late-February start of the US-Iran conflict, and there is still no breakthrough in the stalled talks, despite pressure from regional leaders and the rest of the world.

CFTC Report: Defensive currency positioning takes hold

The week in one sentence: Sterling and Euro shorts deepened in the week to September 22, while Yen longs were cut sharply. Oil positioning improved despite a steep price decline, and Gold exposure remained crowded. The main signal was a more defensive currency positioning backdrop.

Fed vs BoJ: Both hiked. The market only believes one of them – and the chart shows which

The Fed and the BoJ have just done something remarkably similar. Both central banks raised interest rates by 25 bps last week, both are confronting inflation risks, and both signal that future decisions will depend on incoming economic data.