Mixed US Economic Data Caused Fluctuations in the Gold Price
On Friday, the gold (XAU) price experienced extra volatility after the US Nonfarm Payroll (NFP) and ISM Services Purchasing Managers' Index (PMI) were released.
XAU/USD dropped towards 2,025 after the release of higher-than-expected NFP figures. However, the pair rose after ISM Services PMI numbers appeared lower than the forecast, reaching 2,064. Friday's data revealed that 216,000 new jobs were added in December, exceeding the forecast of 170,000. Thus, the data indicates the labor market's robustness even under tight financial conditions. Meanwhile, the PMI report indicated a significant slowdown in US service activity in December. According to the CME FedWatch tool, markets now estimate roughly a 64% chance of a rate cut by the US central bank in March, decreasing from 90% before the New Year.
XAU/USD declined during the Asian and early European sessions. Today, the macroeconomic calendar is rather uneventful. 'Spot gold may fall into a range of $2,028–2,035 per ounce, as suggested by its wave pattern and projection analysis,' said Reuters analyst Wang Tao.
The Japanese Yen Is Weakening Due to a US Dollar Resurgence
The Japanese yen (JPY) rebounded from 146.000 on Friday as the US dollar rose.
On Friday, trading activity was low in Asia as the Japanese market was closed due to a holiday. The Japanese yen fell by 2.5% last week due to a substantial resurgence of the US dollar, as anticipations of immediate interest rate cuts by the US central bank this year decreased. However, recent comments from Bank of Japan (BOJ) Governor Kazuo Ueda caused speculation about Japan potentially moving away from its negative interest rate monetary policy. Last month, Ueda mentioned an increasing probability that Japan is leaving a period of low inflation and reaching its price stability goal. He further noted that the board might consider altering its monetary policy if the positive feedback loop between wages and prices strengthens and the chance of sustainably meeting the 2% inflation target becomes more likely.
USD/JPY was falling during the early European trading session. Investors await US inflation data on Thursday for additional insights into the Federal Reserve's monetary policy this year and next week's Japan inflation report to understand the local interest rate path. Today's key event for JPY traders is the Tokyo Consumer Price Index (CPI) report at 11:30 p.m. UTC. Higher-than-expected figures might trigger a strong sell-off in USD/JPY.