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  • 2024-10-02

Bonda Asia: Dollar Rises, Oil Prices Fall, USD/CAD Edges Up

Central banks' purchases of gold have been one of the main driving forces behind this year's record high international gold prices. However, in the past, central bank officials rarely signaled their intentions to buy gold in advance. But this Monday, officials from the Central Bank of Mexico, the Central Bank of Mongolia, and the Czech National Bank broke with this convention and publicly praised the practice of increasing gold reserves. These officials stated that against the backdrop of escalating geopolitical tensions and declining interest rates, the proportion of gold in their central bank reserves could continue to increase in the coming years. At the annual industry conference of the London Bullion Market Association held in Miami, officials from these three central banks spoke together in a panel discussion. Behind the rise in gold prices, some of the credit is undoubtedly due to the unprecedented gold purchases by central banks, as managers of these reserves seek a safe haven in the precious metals market to protect their national wealth from geopolitical and economic uncertainties.

Additionally, after two consecutive weeks of decline, the Japanese yen fell to 149.98 on Monday, marking the most severe drop since 2009 within five days ending October 4th. The prospect of further depreciation of the yen prompted strategists to warn of increased intervention risks near the 150 level or the 200-day moving average at 151.25. Recent cautious remarks from Japanese officials mean that the market no longer expects the interest rate differential between the US and Japan to narrow as quickly as previously anticipated. Japan's new Prime Minister, Fumio Kishida, stated that Japan is not yet ready to raise interest rates, while strong US data has led traders to reduce bets on US monetary easing. According to data compiled by Bloomberg, five instances of yen buying from 2022 to the first half of this year have led to an average appreciation of more than 5 yen for the Japanese currency. Japan's top currency official, Atsushi Sado, said earlier this month that he is closely monitoring the动向 of the foreign exchange market, including speculative trends. Japan's new Finance Minister, Katsunobu Kato, also warned that sudden fluctuations in the yen could have negative impacts on businesses and households. However, strategists' opinions remain divided, with some believing that there is still a long way to go before authorities decide to re-enter the market.

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Data to watch today includes the UK's unemployment rate for August, Germany's ZEW Economic Sentiment Index for October, the US New York Fed Manufacturing Index for October, Canada's unadjusted CPI year-on-year rate for September, and the US New York Fed's 1-year inflation expectations for September.

Gold/USD

Gold fluctuated downward yesterday, closing slightly lower on the daily chart, and is currently trading around 2642. In addition to profit-taking putting some pressure on gold, optimistic comments from Fed officials and the cooling expectations of further substantial rate cuts by the Fed were also significant factors in pressuring gold's retreat. However, lingering geopolitical tensions and expectations of rate cuts by the Fed this year limited the downside for gold. Today, attention is focused on resistance around 2660, with support near 2630.

AUD/USD

The Australian dollar fluctuated downward yesterday, closing slightly lower on the daily chart, and is currently trading around 0.6710. In addition to profit-taking putting some pressure on the exchange rate, the rise of the US dollar index, supported by optimistic comments from Fed officials and cooling expectations of further substantial rate cuts by the Fed, was also a significant factor in pressuring the Australian dollar to weaken. However, China's economic stimulus measures and expectations that the Reserve Bank of Australia will maintain interest rates limited the downside for the exchange rate. Today, attention is focused on resistance around 0.6800, with support near 0.6600.

USD/CAD

The USD/CAD fluctuated upward yesterday, closing slightly higher on the daily chart, and is currently trading around 1.3810. In addition to the US dollar index rising on multiple favorable factors providing strong support for the exchange rate, the easing of tensions in the Middle East and a significant drop in crude oil prices also provided strong support. Furthermore, expectations of a rate cut by the Bank of Canada in October also provided some support for the exchange rate. Today, attention is focused on resistance around 1.3900, with support near 1.3700.

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