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Market Insights

Trading Insight: Gold upbeat, USD slips, BOJ sinks USD/JPY

Trading insights: Strong USD drives GBP lower ahead of BoE

Gold, China, USD/JPY Forecast:

  • China’s new loans issued in August beat forecasts, inflation report eases deflationary pressures.
  • USD/JPY falters on hawkish commentary for the Bank of Japan (BOJ).
  • US Dollar weakness boosts gold’s safe-haven appeal.

China’s new Yuan loans recovers from July’s slump

China’s new Yuan loans report represents the value of credit (in the form of new loans) issued by the People’s Bank of China (PBOC). With the August data coming in hotter than expected, the number of loans issued rose to ¥1360B, ¥1014.1 higher than the previous month.

China loans

With the recent rate cuts in mortgages and other stimulus measures introduced to promote spending in the world’s second largest economy, the report boosted stocks, overshadowing concerns over the sell-off in the property sector.

The combination of easing deflationary pressures from the recent inflation report and increased lending resulted in an optimistic tilt, that filtered through to global indices.

At the time of writing, the German 40 (DE40) and France 40 (FRA40) are trading 0.70% higher on the day, while the UK100, has gained 0.40%.

Bank Of Japan (BoJ) hawkish tilt drives Yen appreciation

As US dollar strength subsided, EUR/USD rose above the 1.070 mark, while GBP/USD surged above 1.250.

For USD/JPY, commentary from BOJ governor Ueda hinted at the prospects for Japan’s central bank to end the negative interest rate policy, resulting in Yen appreciation. With USD/JPY currently shedding approximately 1%, prices have fallen back to the 20 day moving average at 146.27, with the next layer of support holding at the current daily low of 145.906.

USD/JPY Daily Chart


Chart prepared using TradingView

Gold benefits from USD weakness - price above the 200 - day MA

As the USD slipped against a basket of currencies, gold prices bounced off of the 200-day moving average support at $1,919, printing a daily high of $1,930. With trendline resistance of the falling wedge holding firm at $1,940, a break of this level could assist in driving gold prices back toward the September high of $1,952.8.

Gold Daily Chart


Chart prepared using TradingView

Looking ahead to tomorrow’s economic agenda, the below events could play an additional role in driving price action and volatility.

Eco calendar 12 Sep

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