Support
Yen surges to five-month high
The market remains sensitive to evolving trade policies and economic data, with investors balancing between risk appetite and the safety of assets like the yen and gold
Asian Markets
The Japanese yen surged to a five-month high against the dollar, touching 147.31 yen. The currency's advance was fueled by heightened safe-haven demand amid trade uncertainties and hawkish signals from the Bank of Japan (BOJ), which hinted at further rate hikes. Supporting this sentiment, Japanese government bond yields climbed to nearly 16-year highs, bolstered by reports suggesting a possible rate increase as early as May. With inflation persisting at 4%, double the BOJ's target, the market's focus has shifted to the likelihood of tighter monetary policy.
In China, trade data painted a concerning picture as imports unexpectedly contracted by 8.4% year-on-year for January-February, defying expectations of 1% growth. Exports edged up by just 2.3%, falling short of forecasts and significantly slower than December's 10.7% gain. The decline in imports was broad-based, impacting key commodities such crude oil, raising fresh concerns about the strength of domestic demand in the world's second-largest economy.
European Markets
In Europe, the focus was on German factory orders, which sharply missed expectations. Orders fell 7.0% month-on-month in January, far below the forecasted -2.4% and a reversal from the revised 5.9% gain seen previously. On a yearly basis, orders were down 2.6%, compared to expectations for a 2.6% gain, signaling continued challenges for the region's largest economy.
Gold
Gold prices (XAU/USD) found support from dip-buyers following an intraday drop below the $2,900 level, climbing to a new daily high during early European trading. The precious metal's movement remains range-bound as investors await the highly anticipated U.S. Nonfarm Payrolls (NFP) report for February, which could provide vital clues on the Federal Reserve's next move. Market sentiment suggests that signs of cooling in the labor market might reinforce expectations of multiple rate cuts by the Fed this year, weighing on the U.S. dollar and supporting gold prices.
Traders are now closely monitoring the upcoming U.S. employment data, with forecasts pointing to 159,000 new jobs in February and an unemployment rate steady at 4.0%. Fed Chair Powell's speech later in the day is also set to attract significant attention for any hints on the policy path ahead.
