USDJPY extends recovery amid sluggish markets

Market sentiment remains sluggish on early Monday, after a volatile week, as traders struggle to cheer fresh hawkish Fed chatters and geopolitical tension surrounding China. Adding strength to the indecision could be mixed Aussie data, as well as a lack of major catalysts scheduled during the week.

Against this backdrop, the US Dollar struggles to extend the latest gains and the same triggered a corrective bounce in the prices of gold and crude oil. It’s worth observing that AUDUSD and USDJPY remained firmer even as US stock futures and Asia-Pacific equities saw losses. BoJ headlines and a recovery in yields seemed to have offered additional strength to the yen pair.

On the other hand, USDCAD, NZDUSD and USDCHF remained mostly inactive during the first day of the week while EURUSD printed minor losses at the latest.

Elsewhere, BTCUSD extends the previous week’s losses while ETHUSD struggles for clear directions.

Following are the latest moves of the key assets:

• Brent oil extends the previous day’s rebound to $80.55, up 0.75% intraday at the latest.
• Gold snaps two-day downtrend to bounce off one-month low, up 0.60% near $1,876 by the press time.
• USD Index struggles for clear directions around 103.00 after printing the first weekly gains in four.
• Wall Street closed with losses and weighed on the equities in the Asia-Pacific, as well as in Europe and the UK, even if the markets are quiet of late.
• BTCUSD is mildly offered near $22,900 but ETHUSD stays firmer past $1,650 as we write.

Traders take a breather

After multiple central bank events and the top-tier data triggered market volatility in the last week, traders appear silent during early Monday amid a lack of major data. Also challenging the latest market moves is the reassessment of the latest US data and mixed signals from the ECB, as well as from the BoE, following the Fed’s dovish hike and hawkish concerns from the other mentioned central banks.

In doing so, the market players struggle to justify the latest fears surrounding the US-China tensions, as well as hopes of no sooner end of the Fed rate hikes due to Friday’s strong US jobs report and ISM Services PMI.

Elsewhere, Australia’s better-than-expected Q4 Retail Sales joined upbeat inflation to put a floor under the AUDUSD prices while firmer US Treasury bond yields and an absence of hawkish BoJ concerns allowed USDJPY to stretch the previous weekly run-up. Further, equities are downbeat as softer earnings join risk-averse catalysts and hawkish Fed concerns.

Cryptocurrencies bear the burden of the US Dollar rebound and fresh fears of adult regulations on trading. However, the hopes of China’s e-Yuan push puts a floor under the prices.

• Strong buy: USDJPY
• Strong sell: ETHUSD, GBPUSD
• Buy: USD Index, USDCAD, Nasdaq, EURUSD
• Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

Nothing major to watch

Although Eurozone Retail Sales and Canada PMI will decorate the calendar, nothing important is there to watch and hence the markets are likely to remain inactive for the rest of the day.

May the trading luck be with you!