Yen Regaining Ground, GBP/AUD Staying Bullish Despite Loss of Momentum

Japanese Yen stages a broad recovery today, buoyed by notable retreat in European benchmark yields. Meanwhile, Dollar is softening against Yen, yet holding its ground across other major currencies. New Zealand Dollar emerges as the day’s underperformer, yet its losses remain contained within Friday’s range against all counterparts. Sterling and Euro follow closely as the next underperformers.

One currency pair to closely monitor this week is GBP/AUD, as the market braces for significant economic releases from both UK and Australia. UK’s GDP and inflation data, coupled with Australian employment figures, are poised to potentially sway the direction of GBP/AUD.

Technically, rebound from 1.8584 has been losing momentum since mid January, as seen in D MACD. But near term outlook will stay bullish as long as 1.9181 support holds. Rise from 1.8584 is tentatively seen as resuming the long term up trend through 1.9967 high. However, firm break of 1.9181 will dampen this view and extend the correction from 1.9967 with another falling leg.

In Europe, at the time of writing, FTSE is down -0.08%. DAX is up 0.37%. CAC is up 0.42%. UK 10-year yield is down -0.032 at 4.055. Germany 10-year yield is down -0.034 at 2.351.

Copper stabilizes after selloff on supply concern, no clear bounce yet

Copper trades steadily in range today, showing no immediate signs of a rebound. Near term selloff intensified following last week’s announcement by KoBold Metals, a venture with backing from notable figures including Bill Gates, about the discovery of a substantial copper deposit in Zambia. This revelation has the potential to significantly augment global copper supplies in the years ahead, casting a shadow over the commodity’s near-term price outlook.

Technically, near term outlook will stay bearish as long as 3.7414 resistance holds. Deeper decline would be seen to 3.5021 support. Firm break there will pave the way to retest 2022 low at 3.1314. This bearish development, if realized could drag AUD/USD further towards 2022 low at 0.6169.

RBNZ’s Orr stands firm on restrictive policy to combat persistent inflation

RBNZ Governor Adrian Orr, in a parliamentary committee appearance today, articulated a firm stance on maintaining restrictive monetary policy to tackle the country’s higher-than-desired inflation rate.

Currently sitting at 4.7%, New Zealand’s inflation remains “too high” and overshoots RBNZ’s target band of 1% to 3%

“That’s why we’ve retained a restrictive monetary policy stance with the official cash rate at 5.5%, and we’ll be back at the end of this month again with our updated views on the wisdom of that stance.”

Deputy Governor Christian Hawkesby provided additional insights, noting the resilience of New Zealand’s financial system and the capacity of consumers to absorb higher interest rates.

“The vast majority of households have continued to manage the debt and service their mortgages, although some are struggling and falling behind,” Hawkesby added.

USD/JPY Mid-Day Outlook

Daily Pivots: (S1) 149.01; (P) 149.29; (R1) 149.56; More…

Intraday bias in USD/JPY is turned neutral as retreat from 149.57 is extending. Some consolidations could be seen but further rally is expected as long as 147.62 support holds. Above 149.57 will resume the rise from 140.25 to retest 151.89/93 key resistance zone. Decisive break there will confirm resumption of larger up trend.

In the bigger picture, fall from 151.89 is seen as a correction to the rally from 127.20, which might have completed at 140.25 already. Firm break of 151.89/93 resistance zone will confirm up trend resumption, and next target will be 61.8% projection of 127.20 to 151.89 from 140.25 at 155.50. This will now remain the favored case as long as 140.25 support holds.