USDJPY traces yields to retreat from yearly high amid Japan meddling fears

The risk appetite remained fragile on early Thursday as market players struggled amid the US government shutdown fears. Adding strength to the cautious mood could be the hawkish Fed talks and fears of another drama in China debt markets due to Evergrande. Furthermore, mixed data from Australia and New Zealand and unimpressive comments from the ECB officials also added to the market’s anxiety on early Thursday.

Amid these plays, the US Treasury bond yields and the US Dollar seesaw at the yearly top while the USDJPY bears the burden of the fears that the Japanese authorities will intervene to defend the Yen at the multi-month low.

EURUSD licks its wounds at the lowest level since January whereas GBPUSD stays pressured at the six-month low. Further, AUDUSD bounces off its yearly bottom despite the softer-than-expected Aussie Retail Sales whereas NZDUSD snaps a two-day losing streak with a rebound from the weekly low.

Elsewhere, Gold Price remains depressed at the lowest level since March, after falling the most in two months the previous day, whereas Crude Oil refreshes yearly top amid hopes of more energy demand and depleting supplies.

It should be noted that the BTCUSD and ETHUSD ignore downbeat options market signals and fears of US SEC regulation amid optimism ahead of spot and futures ETF approvals.

Following are the latest moves of the key assets:

• Brent oil refreshes yearly high around $96.45 before retreating to $95.60 at the latest.
• Gold price prods three-day losing streak at the lowest level in six months, close to $1,875 by the press time.
• USD Index retreats from the 10-month high to 106.50 as we write.
• Wall Street closed mixed but the Asia-Pacific stocks edged lower. That said, equities in Europe and the UK print mild losses at the latest.
• BTCUSD and ETHUSD trade slightly positive to around $26,400 and $1,620 as we write.

Not out of the woods

The upbeat US data, strong yields and sour sentiment join the cautious mood ahead of another round of data dump from the US to limit the market moves on early Thursday.

On Wednesday, US Durable Goods Orders rose past market forecasts and expectations with 0.2% growth in August while the Nondefense Capital Goods Orders ex Aircraft posted a remarkable growth of 0.9% versus 0.0% expected and -0.4% previous readings. Also, Federal Reserve Bank of Minneapolis President Neel Kashkari reiterated his hawkish remarks during the CNBC interview on Wednesday while citing the need for higher rates, as well as conveying expectations of “higher for longer” rates in the next year.

Also contributing to the risk-off mood and weighing on the US Dollar are comments from White House Economic Adviser Jared Bernstein who came out with challenges for the US economy but also said that the US economy expected to keep going in “a pretty good way” absent a policy mistake or exogenous shock. It should be noted that Goldman Sachs appears too pessimistic about the US economy as it predicts a 90% chance of the US government shutdown after forecasting multiple such economic shocks earlier in the week.

Furthermore, a halt in trading of China’s Evergrande shares joins the Dragon Nation’s policymakers’ regular market interventions, both verbally and via actions, to keep the markets jittery, as well as favor the US Dollar.

Talking about the cryptos, chatters about the ETH Futures ETF approvals in early October allow the BTCUSD and ETHUSD to edge higher even as the US SEC braces for more regulations to curb the crypto trading and the options market shows pessimism among traders.

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

More US data, Fed’s Powell to watch

Moving on, the US PCE Price Index, the final readings of the US Q2 GDP and weekly US Jobless Claims will join the Fed Chair Jerome Powell’s speech will be crucial to watch for clear directions. Above all, developments about the US debt ceiling deal and China will gain major attention.

May the trading luck be with you!