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Midday Brief
Risk-On market sentiment has kept the yen currency under pressure on the foreign exchange market, following strong PMI data from a number of top and emerging Asian countries this morning.
The USDJPY pair surged above the 109.00 level, as risk-on sentiment causes heavy Yen selling. The pace of the gains in the USDJPY pair has started to slow ahead of the release of today’s ISM manufacturing report.
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It should be noted that Japan and China are BOTH observing market holidays for the early part of this week, so the USDJPY pair is going to be more volatile. Likewise, the market action on the foreign exchange market is relatively muted, due to the fact that the UK is also observing a market holiday.
The US dollar has lost ground against the single currency after German retail sales came in much-better-than expected during the European session with a 7.7 percent reading. This was almost double market expectations.
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Still, with the COVID-19 lockdown still in force in Germany, markets are taking the news in their stride right now. Additionally, a cautious mode towards the EURUSD pair is still in place after Friday’s quick one-hundred pip sell-off.
Gold is notably on the rise today, following Friday’s mini meltdown. Gold may be supported by demand during the China’s holiday, and data this morning which shows that gold demand has rose by ninety-three percent last quarter.
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The majority of the trading action is taking place in the cryptocurrency market this morning, with the first and second largest cryptos, Bitcoin and Ethereum capturing the headlines on the day.
News that a major a Silicon Valley venture capital fund is considering a $1 billion cryptocurrency fund, and other positive news that an Ethereum bond may be about to be created is also propelling both BTCUSD and ETHUSD higher.
Traders now look ahead to two major events during the US trading session, which are the ISM manufacturing report and a scheduled speech from Federal Reserve Chairman Jerome Powell.
Both events have the potential to move the needle. Any hawkish commentary from FED Chair Powell could move the needle for the US dollar and US stock markets.
