June 07, 2021
USD/JPY: The USD/JPY pair almost doesn’t show any impulses on the first trading day of the new week. The pair is extenings the previous week’s losses and remains a little bit pressured. The readings eased the expectations that the Fed would start rate tapering soon. This, in turn, makes the US dollar less attractive. On the other hand, the Japanese yen gains on its safe haven appeal, despite the depressive economic outlook. The extension of lockdown, as the country is still fighting with the rising coronavirus cases, indicates a weak vaccine rollout programm. The state of emergency in Tokyo and other areas has been extended to June 20. There are less than two months left before the Summer Olympics open. According to the Associated Press, only 2-3% of the Japanese population is fully vaccinated so far, which is quite a lower number in comparison with developed countries which can affect the JPY rate in the long term.
AUD/USD: AUD/USD ended the week rising over 1% on US dollar weakness in a spike to 0.7745 the high. The Reserve Bank of Australia didn’t deliver any surprise at its policy meeting last week. As a result, the Aussie has benefited from stabilization in metal prices. Growing prices which are up over 43% since April 2021, have been the main driver for Australia’s boom. China earlier reported about a plan to reduce the cost of Australia’s biggest export, but so far the impact hasn’t been felt a lot. China buys 60% of Australia’s iron ore. However, external factors should generally dominate the price action in AUD.
GOLD: Gold prices have started the week at the same levels after a huge drop in the US dollar. Gold ended up 1.1% higher on Friday, having recovered from the 1.856 lows after US Nonfarm Payrolls data showed hiring increased below than expected. Nonfarm payrolls increased by a solid 559.000 jobs last month, backed by higher COVID-19 vaccination rates, but the reading was still below the consensus forecast in May. Janet Yellen, Treasury Secretary, reported that President Joe Biden should push his $4 trillion spending plan even if it triggers inflation that persists into next year and higher interest rates. It’s worth paying attention that May US Consumer Price Index is going to be released this week. Following May’s reaction in FX and markets that looked through the jump in inflation, the same may happen this month.