• USDJPY prints new highs; hawkish Fed signals required to boost rally

• Will RBNZ’s policy approach help NZD/USD to stage a bull run?

• Gold gets hammered by Treasury yields; bearish but oversold

 

US Nonfarm payrolls --> USD/JPY

US lawmakers passed a last-minute deal during the weekend to avert a government shutdown until mid-November.

With fiscal risks moving temporarily out of the spotlight, the focus will turn back to interest rates as the US dollar is stubbornly trying to revive its uptrend against the battered Japanese yen. The price went up to 149.81 on Monday, which is almost a one-year high. However, traders are waiting for the Fed chief and his colleagues to give their thoughts about the economy later in the day, so the momentum is weak.

Technically, it’s worth watching whether the pair can find enough buyers to breach the tentative resistance trendline from March at 150.75 and rally beyond the 2022 top of 151.93. If that proves to be the case, USD/JPY could speed up towards the upper band of a short-term bullish channel at 154.50. Whether that happens will depend on the outlook for the US economy and interest rates, starting with the ISM business surveys and the nonfarm payrolls report this week.

Analysts expect jobs growth to ease back to 163k, though a lower unemployment rate of 3.7% and a rebound in average earnings could still maintain confidence in the US economy and therefore in the greenback.

RBNZ policy meeting --> NZD/USD

The antipodean currencies could make headlines this week as central banks in Australia and New Zealand are scheduled to announce their rate decisions on Tuesday and Wednesday, respectively. Although no changes are expected, investors would like to know whether additional tightening is possible in the year ahead, especially in New Zealand, where projections point to two more rate increases.

NZD/USD is still struggling to surpass September’s bar of 0.6000, but the improvement in the technical signals sustains optimism for a bullish breakout. The bulls will also need a victory within the 0.6100 region to enhance buying appetite.

Treasury yields --> Gold

US Treasury yields continued to trend higher for another month in September, making gold less attractive to investors who sought higher dividends and interest rates in alternative markets. The precious metal started October’s session on the wrong foot on Monday, sliding to 1,839. Although the downfall looks overdone, there is no important support region until 1,800 or lower at 1,773.

A hawkish Fed and the absence of any recessionary tendencies in the US economy could add more fuel to the bearish cycle.