Analysis of Current Market Trends: April 26

Analysis of Current Market Trends: April 26

The Japanese Yen (JPY) has been experiencing bearish pressure lately, trading at its weakest level against the US Dollar in over three decades. This decline comes following the decision by the Bank of Japan (BoJ) to keep monetary policy settings unchanged. With the key interest rate target range steady at 0%-0.1%, the BoJ has stated its commitment to adjust monetary easing if trend inflation were to rise further. BoJ Governor Kazuo Ueda mentioned in a press conference that the possibility of a prolonged JPY weakness is not zero, with exchange rates having both positive and negative impacts on the economy. As a result, USD/JPY has surged above 156.50, marking levels not seen since May 1990.

Later in the day, the US Bureau of Economic Analysis will release the Personal Consumption Expenditures (PCE) Price Index data for March. The core PCE inflation, the Federal Reserve’s preferred measure of inflation, is expected to indicate firm price pressures. This has prompted markets to delay bets on a Federal Reserve rate cut. On the other hand, the US economy showed softer than expected expansion in the first quarter, leading to the US Dollar Index (DXY) closing in negative territory. Despite this, a significant increase in the GDP price deflator helped limit losses for the DXY. As of early Friday, the DXY is fluctuating above 105.50, while the 10-year US Treasury bond yield remains near 4.7%.

Currency Markets

The Japanese Yen has been weakest against the Australian Dollar, as shown by the percentage change table of major currencies. The heat map reflects these changes, with the USD Index (DXY) closing negatively on Thursday. Meanwhile, EUR/USD has seen gains, reaching its highest daily close in over two weeks. The pair remains in consolidation below 1.0750 in the European session. GBP/USD also extended its rebound for a third consecutive day, holding steady around 1.2500. Gold prices edged higher on Thursday, but struggled to gather momentum as US yields rose. XAU/USD is trading in the green above $2,340.

The Core Personal Consumption Expenditures (PCE) Price Index, released monthly by the US Bureau of Economic Analysis, measures changes in prices of goods and services purchased by consumers in the US. This index is also the Federal Reserve’s preferred measure of inflation. The year-over-year (YoY) reading compares prices of goods to the same month a year earlier, excluding volatile food and energy components. A high reading is bullish for the US Dollar (USD), while a low reading is bearish, reflecting market sentiment and potential future monetary policy adjustments.

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