Dollar Strength, Yen Weakness: Navigating Today's Currency Currents
31 October 2023
As October draws to a close, traders are keenly watching as a series of economic indicators unfold. China, a powerhouse in global manufacturing, sent ripples across the market with its PMIs falling below the expected mark. Notably, the manufacturing PMI slid below the critical threshold of 50. This downturn was accompanied by the Bank of Japan's announcement, maintaining their current interest rates while incorporating flexibility in their yield curve control policy. This change has had immediate consequences on the Japanese yen, marking its significant depreciation.
While Asia grapples with these shifts, Europe awaits the CPI flash estimate. An anticipated decline in the yearly inflation rate to 3.1% is on the horizon, and its implications on the European economy will be scrutinized closely by investors and policymakers alike.
Meanwhile, North America is equally bustling with activity. Canada is set to disclose its GDP, while the US looks forward to the CB Consumer Confidence report. As the day concludes, New Zealand is poised to reveal its job data. The earnings calendar showcases big players like Pfizer and AMD, both slated to announce their results. The currency market presents a vivid picture with the American dollar's might and the Japanese yen's frailty. This dynamic has propelled the American dollar vis-à-vis the Japanese yen past the pivotal 150 mark.
Turning our attention to the stock indices, there's a sense of déjà vu as some like the Dow Jones and the S&P made marked reversals. However, their progress remains stunted, hovering below the 38.2% Fibonacci. Comparatively, DAX and NASDAQ's increments seemed unspectacular, both restrained by substantial resistances. The fleeting optimism observed is purely short-term, given the current market conditions.
On the commodities front, the scene is brimming with activity. While gold's descent is minimal, silver's is more pronounced. Oil, on the other hand, stands at a precipice. It teeters close to pivotal horizontal supports, and a potential breakout could herald a decisive long-term sell signal.