Currency Shifts as Commodity Currencies Weaken, Yen and USD Strengthen

Hello traders, and welcome to Tuesday! With markets in the US and Canada back open after the Labor Day holiday, we’re set for a full day of trading activity. Let’s dive into the fundamentals and see what’s on the horizon.

Today’s economic calendar is relatively light, but there are still some important data points to keep an eye on. We’ll start with inflation data from Switzerland, expected to come in at 0.1%. Shortly after, we’ll get Swiss GDP figures, forecasted at 0.5%. The day will wrap up with the ISM Manufacturing PMI from the US, anticipated at 47.5%, which could provide some insights into the health of the US manufacturing sector. Overall, it’s a fairly straightforward day in terms of macroeconomic news, with no major surprises expected.

On the currency front, we’re seeing significant weakness in commodity-linked currencies. The Australian Dollar, New Zealand Dollar, and Canadian Dollar are all showing notable declines, reflecting a negative sentiment towards these currencies at the moment. It remains to be seen whether this will develop into a broader trend throughout the week.

Conversely, the Japanese Yen and US Dollar are currently the strongest performers, suggesting a shift towards safer assets. This could indicate a cautious tone in the markets, despite the overall optimism.

Looking at the indices, futures are holding up well, remaining close to long-term highs. There’s a clear sense of optimism here, with no immediate signs of a potential reversal.

In the commodities market, we’re seeing a mixed bag. Silver continues to show weakness, while gold, although slightly down, remains near its long-term highs, indicating a relatively stronger position compared to silver. Oil is mostly moving sideways, with a slight bearish tilt in the mid-term as the last few days have been predominantly negative.

Yesterday, I highlighted the potential for strength in the Euro across various pairs, and indeed, the Euro emerged as the second strongest currency. The bullish setups we identified remain valid, and it’s likely we’ll continue to see gains in the Euro over the coming days. Keep an eye on these pairs for potential trading opportunities.

Source: https://www.axiory.com/analytics/market-news/currency-shifts-as-commodity-currencies-weaken-yen