Japanese Yen is extending its broad-based pullback today. This movement appears to be a strategic response from traders lightening their positions in anticipation of the upcoming BoJ policy decision. Although a rate hike by the BoJ seems highly unlikely at this stage, there is speculation about potential adjustments in the central bank's communication. These changes are anticipated to lay the groundwork for concluding the yield curve control policy in January, followed by a possible rate hike in April to exit the prolonged phase of negative interest rates. However, given the BoJ's history of unexpected moves, traders are bracing themselves for substantial volatility, regardless of the decision made.
Japanese Yen continues to weaken, accelerating its decline in today's Asian session and edging closer to a multi-decade low against Dollar. The market appears to be gaining confidence that Japan will not intervene at this stage, despite the steep and extended depreciation. But the country's approach to currency intervention remains shrouded in typical discretion. So, it's "never say never" regarding the timing of intervention.
New Zealand's BusinessNZ Performance of Services Index experienced a notable dip in October, falling from 50.6 to 48.9, a level indicative of contraction in the sector. This decline also positions the index well below its long-term average of 53.5.
There's a noticeable lack of a unifying theme in the forex markets today, largely attributed to an empty economic calendar across European and North American regions. Both Australian Dollar and British Pound are seeing a rebound from their recent downturns, particularly noticeable in currency crosses. However, the continuation of this momentum hinges significantly on impending economic data releases. Key reports to watch include Australian consumer and business confidence, along with UK employment data set to be unveiled tomorrow.
Shifting the focus to the commodities market, Gold is capturing attention as it nudges close to a near-term resistance at 1930.56, following successful defense of 1900 level last week. Decisive breakthrough at this juncture could signal completion of the pullback from 1952.82, further suggesting resumption of its upward march started from 1884.83.
New Zealand's BusinessNZ Performance of Services Index reported another slump in August, marking the third consecutive month of declining in the services sector. This downturn saw PSI slip from 48.0 in July to 47.1 in August, notably falling short of long-term average of 53.5.
As we look forward to the upcoming Asian session, all eyes are on Australian Dollar, gearing up to be the focal point. This heightened attention comes as RBA plans to publish the minutes of its meeting held on September 5. Remarkably, the meeting marked the third consecutive time RBA chose to maintain the status quo on interest rate.
New Zealand's BusinessNZ Performance of Services Index climbed from 50.1 in April to 53.3 in May, revealing a slight uptick in the services sector. However, it's worth noting that this figure remains marginally under long-term average of 53.6. A closer look at the numbers shows activity/sales leaping from 45.4 to 52.0, employment increasing from 50.5 to 52.6, and new orders/business ascending from 50.1 to 55.4. Stocks inventories slightly declined from 57.1 to 56.8, while supplier deliveries edged up from 50.6 to 51.1.
Dollar and Japanese Yen saw a modest bounce back in today's Asian session, making up for some of their steep losses from last week. However, the buying momentum for both currencies remains relatively weak. Due to a light economic calendar today, coupled with public holiday in the US, trading could be relatively quiet. But, the rest of the week is likely to bring considerable volatility, with BoE and SNB rate decisions, Fed Chair Jerome Powell's testimony, and a barrage of crucial economic data.
The forex markets are holding steady in a consolidative pattern today. Notably, Euro has remained largely unaffected by continued hawkish messages emanating from top ECB officials, who have merely echoed President Christine Lagarde's suggestion that an interest rate hike is likely in July, while situation in September remains uncertain.