Fawad Razaqzada

It was a textbook reaction in gold in response to the stronger jobs and consumer sentiment data, with the metal falling, dollar and yields rising. It fell from around $2020 to a low so far of $2002. While down, it is certainly not out. It was only on Monday when it hit a new record high, albeit a short-lived one. Still, the downside could well be limited, especially if we see more evidence of waning inflationary pressures around the world.

Welcome to another edition of Forex Friday, a weekly report in which we highlight selected currency themes. In this week's edition, we will discuss the US dollar in light of the NFP beat, and ahead of next week's key macro events.

The GBP/USD is poised for a significant challenge in the upcoming days, spanning the end of this week and much of the next. Anticipation surrounds key data releases from both the UK and the US, with the US nonfarm payrolls report on Friday and CPI data on the horizon. Moreover, the Federal Reserve and the Bank of England are set to announce their respective interest rate decisions next week.

This morning saw some big moves in USD/JPY and all other yen crosses. While these yen pairs all managed to bounce off their worst levels by mid-morning London session, they remained under intense pressure. The yen rally comes after BoJ Governor Ueda met Japanese Prime Minister Kishida earlier in the day, with investors anticipating a policy shift in Japan in the not-too-distant future.

Crude prices remain on a slippery slope after the OPEC+ failed to impressive with their voluntary output cuts last week. From Thursday’s high point, oil prices have now fallen about 12% so far. On Wednesday, brent dropped below $75 and WTI took out $70, with both contracts falling in excessive 3.5% each on the day.