On Monday, the Russian rouble (RUB) was the best-performing currency among the 20 global currencies we track, while the Nigerian naira (NGN) showed the weakest results. The British pound (GBP) was the leader among majors, while the US dollar underperformed.
Gold is Staying Near a Three-Month High
Gold (XAU) declined by 0.43% on Monday as traders repositioned after the US Treasury yields dropped. Investors closely watch the Middle East conflict unfold and monitor economic indicators to understand the rate hike trajectory.
Yesterday, the yield on the 10-year US Treasury note briefly pierced through the critical 5% mark, reaching levels last seen in July 2007. The increase intensified concerns about a possible slowdown of the US economy due to increased borrowing costs. Usually, gold tends to decline when there is a possibility of more rate increases. However, the gold price remains high due to safe-haven flows induced by the Middle East conflict. 'Safe-haven demand will continue to drive gold higher after a slight period of consolidation. We believe geopolitical tensions and the uncertainty in the Middle East will continue to drive prices higher,' said David Meger, the director of metals trading at High Ridge Futures.
XAU/USD was rising slightly in the Asian trading session but lost some of the gains during the early European trading session. Today, the market will focus on a series of Purchasing Managers' Index (PMI) reports. The US PMI report will be released at 1:45 p.m. UTC, revealing the health of the US economy. Higher-than-expected figures might provoke a sell-off in gold, while weaker-than-expected numbers may push XAU/USD towards 1,980 again. 'Spot gold may retest a support of 1,963 USD per ounce, a break below which opens the way towards 1,942–1,951 range,' said Reuters analyst Wang Tao.
US PMI Report May Define the USD/JPY Trend
The Japanese yen (JPY) was essentially unchanged on Monday and continued to move near 150.000.
Traders view the 150.000 level as critical for USD/JPY. The Japanese authorities may intervene in the currency market if the pair rises above the level. Japanese officials have previously hinted at potential interventions to support the yen's value from depreciation. A weaker Japanese yen boosts exports but raises import costs, potentially impacting essential supply chains. Therefore, we may expect a pullback in USD/JPY.
USD/JPY was falling during the Asian and early European trading sessions. Today's main focus is the US Purchasing Managers' Index (PMI) at 1:45 p.m. UTC. Strong figures may push USD/JPY towards 150.000 again. However, the short-term bearish trend in USD/JPY might accelerate if the figures are lower than expected.