The US Dollar (USD) tried to rebound but fell after disappointing employment data showed Initial Jobless Claims rose to 236K from 192K. The USD moved up and down against major currencies. It strengthened against the Australian Dollar but weakened against the Euro, British Pound, Japanese Yen, Canadian Dollar, New Zealand Dollar, and Swiss Franc. In currency changes, the EUR/USD gained momentum, reaching its highest level since October. The GBP/USD climbed close to 1.3440. Meanwhile, the USD/JPY dipped to around 155.80 due to the USD’s significant drops. The AUD/USD also declined because of the weak job numbers but saw a bit of recovery as the USD weakened.

Geopolitical Factors And Commodities

Commodities prices rose, with WTI surpassing $57.00 per barrel, as traders focused on geopolitical issues and the Fed’s interest rates. Gold hit six-week highs at $4,280 per troy ounce, while silver approached record levels near $64.00 per ounce. Demand for gold is up, as it serves as a safe haven during economic uncertainty. In 2022, central banks, big gold holders, increased their reserves by purchasing 1,136 tonnes. Gold prices are influenced by various factors, including the USD’s strength, geopolitical tensions, and interest rate changes. The surprising rise in initial jobless claims to 236K is crucial. This challenges the belief in a strong US job market and hints at a potential slowdown. We should prepare for continued USD weakness, as this could indicate a new trend. With the EUR/USD breaking past the 1.1750 resistance level, there is potential for further upward movement in the coming weeks. The upcoming German inflation data is critical; a high reading would support the European Central Bank’s more aggressive stance compared to the Federal Reserve. Buying near-term call options on the Euro seems a smart move based on this policy shift.

USDJPY And US Treasury Yields

The sharp drop in USD/JPY to 155.80 is driven by falling US Treasury yields, a pattern we also noticed during market shifts in 2023 and 2024. As long as US data points to a slowing economy and keeps yields low, this pair is likely to continue downwards. Buying put options on USD/JPY is a clear way to act on this outlook. Gold’s rise to a six-week high near $4,280 per ounce is a direct response to the weakening dollar and the likelihood of lower interest rates. This trend is supported by strong demand, as central banks maintain aggressive gold purchases, continuing the record pace set in 2022. We should consider adding long exposure through futures contracts, as the environment favors non-yielding assets. Nevertheless, we need to be selective. The Australian Dollar is lagging, as its weak employment report keeps it struggling around the 0.6700 mark. This reminds us that local economic health is still vital. Pairing stronger currencies like the Euro or Swiss Franc against the dollar may be a more effective strategy. Create your live VT Markets account and start trading now.

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