The Optimism Around China Easing Of Covid Protocols Has Cool Down, The Aussie Pair Is Trading Near 0.68
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Data on the US housing market will be in the spotlight, and with the housing recession dominating recent headlines, these indicators will provide important information on the health of the US housing market.
What's more, the optimism around China and the easing of Covid protocols has dimmed a bit since yesterday after rumors that the US may impose new restrictions on travelers from China. This is because US officials are concerned about the lack of "transparent" data coming from Beijing.
USD/JPY
The dollar gained against the yen by as much as 0.67% to 134.40
In the morning of the Asian session, the USD/JPY pair rose above the 134 level. This level did not last long and the pair returned to trading at 133.
In Asian trade, the highest since December 20, when the BOJ caused the pair to fall sharply as a result of an unexpected loosening of the yield band on 10-year Japanese government bonds.
On that day, the yen posted its biggest one-day gain against the dollar in 24 years, closing 3.8% higher on the day as traders speculated on an eventual withdrawal of the stimulus.
Now, the yen has also come under pressure after the Bank of Japan signaled last week's surprise policy change did not mark the beginning of a broader withdrawal of monetary stimulus.
BJ Governor Haruhiko Kuroda said that "The Bank will pursue the target price in a sustainable and stable manner, accompanied by wage increases, by further easing monetary policy under the control of the yield curve." Meanwhile, Kuroda expressed hope that ongoing labor shortages would encourage companies to raise wages, and said conditions in the Japanese labor market were expected to tighten further.
GBP/USD
The situation on the cable market has improved. The pair in today's trading was on the rise. Currently, the pair is approaching the level of 1.21.
EUR/USD
EUR/USD is trading above 1.0630 today. It is currently maintaining its high level above 1.0650.
Maintaining support for EUR/USD has recently been more hawkish rhetoric from the European Central Bank (ECB) compared to the US Federal Reserve (FED).
ECB policymaker Klaas Knot reiterated this in an interview yesterday, stating that between now and July 2023 it would provide “a pretty decent rate of tightening. Fudge warned that doing too little remains a greater risk with a slowdown to 50 basis points, giving the central bank time to assess the impact of rate hikes. In the rare positive nexus that has been talked about, the worst may already be behind the Eurozone, and the potential recession, if it does occur, will be relatively shallow and short-lived.
AUD/USD
The Aussie pair is in an uptrend on the daily chart. AUD/USD is trading close to 0.68.
The gains were short-lived and the Australian currency is now facing resistance.
Australian and New Zealand dollars fluctuated on Wednesday as initial optimism from China, which reopened its borders after three years, gave way to greater volatility over global growth prospects.
Australian government bond yields rose as markets reopened after Christmas, catching up with their overseas counterparts.
Source: finance.yahoo.com, investing.com, dailyfx.com
