January 19, 2022
USD/JPY: At first, the US dollar rose against the Japanese yen on Tuesday. But then it reversed after the Bank of Japan said it would stick to its ultra-loose monetary policy. The Bank of Japan left its short-term interest rate target unchanged, as the market had expected, and a promise to guide long-term rates around 0% at a two-day meeting that ended on Tuesday. Meantime Japan may decide today to place Tokyo and 12 other areas under a coronavirus quasi-state of emergency as the rapid spread of the Omicron variant lifts nationwide COVID-19 cases to new records and threatens to stretch the health care system. The local resistance level can be seen at 114.95. If the pair reaches this level and rebounds from it, it can trigger a further decline towards 114.20.
AUD/USD: The Australian dollar fell against the US dollar yesterday due to a strong greenback. However, softer Aussie data and concerns over the Fed’s next moves, as well as relating to the Omicron covid variant, keep the pair’s moves limited. As for the economic data, Australia Westpac Consumer Confidence fell in January. The US Empire State Manufacturing Index which measures business conditions for New York manufacturers fell to negative for the first time in two years in December, while the US National Association of Home Builders Housing Market Index also fell and was below market expectations. Due to these events, US 10-year Treasury yields hit their two-year high near 1.88%. The local resistance level can be seen at 0.7205. If the pair reaches this level and rebounds from it, it can trigger a further decline towards 0.7145.
XAU/USD: Gold prices fell on Tuesday due to the strengthening US dollar and Treasury yields. Acting as a risk-negative catalyst is the record high covid cases in Australia’s most populous state New South Wales as well as worsening virus conditions in Japan and China. Escalating chatters over the Fed rate hikes may underpin the US dollar’s strength and can weigh on gold prices. However, other challenges to the risk appetite might defend the gold buyers amid a light calendar in the US and Fedspeak blackout. The local resistance level can be seen at $1820. If the gold reaches this level and rebounds from it, it can trigger a further decline towards $1795.