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March 4th - Bank of Japan Governor Kazuo Ueda stated on Wednesday that a significant increase in wage levels is needed for Japan to sustainably achieve its 2% inflation target. Speaking in parliament, Ueda said, "The Bank of Japan cannot exert a strong influence on real wage growth," which depends primarily on medium- to long-term labor productivity. He added, "However, we will implement monetary policy to ensure that Japan sustainably and stably achieves its inflation target while wages grow."March 4 – Lou Qinjian, spokesperson for the Fourth Session of the 14th National Peoples Congress, stated that safeguarding national sovereignty, security, and development interests is the starting point and ultimate goal of all foreign relations. The Taiwan question is Chinas internal affair and is the core of Chinas core interests. China firmly opposes the erroneous remarks made by Japanese leaders regarding Taiwan. The Chinese people will never allow any external forces to interfere in Chinas internal affairs and will resolutely safeguard national sovereignty, unity, and territorial integrity.Bank of Japan Governor Kazuo Ueda: If the economic and price trends are in line with our forecasts, we will continue to raise interest rates.Japans household consumer confidence index for February was 40, below the expected 38.2 and the previous reading of 37.9.March 4th - Since the outbreak of conflict in the Middle East this week, the yen has continued to weaken, deviating from its traditional safe-haven asset role, and Tokyo traders are preparing for possible government intervention. The yen has depreciated by about 1% since last Friday, to 157.2 yen to the dollar. Traders say this contrasts sharply with previous periods of geopolitical tension. Neil Newman, Japan strategist at Astris Advisory, said, "The yen is no longer a safe-haven asset. Companies stopped doing so about four years ago. They are now under pressure to the opposite, encouraged to invest overseas, and are still doing so on a large scale. In Japans current economic environment, there is no incentive to repatriate funds." Analysts say the yens unexpected weakness highlights structural changes and vulnerabilities in the Japanese economy. The market has been assessing the impact of Sanae Takashis expanded fiscal spending plan and her opposition to further interest rate hikes by the Bank of Japan. Tai Hui, chief market strategist for Asia Pacific at JPMorgan Asset Management, said increased exchange rate volatility has significantly reduced the yens appeal as a hedging currency. Geopolitical conflicts have also increased Japans exposure to rising energy prices and upside inflation risks.

Despite a Solid U.S. Employment Report, Gold Remains Above $1,700 for a Second Week

Aria Thomas

Oct 08, 2022 10:42

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Gold dropped on Friday but still posted its second straight weekly gain, as an upward run in the opening two days of the week helped the bullion longs weather the September U.S. jobs report, which sent the rival dollar soaring.


The gold futures contract for December on the New York Comex declined $11.50, or 0.7%, to $1,709.30 per ounce. Gold for December rose 2.2% for the week, extending the prior week's 1.5% increase.


The spot price of bullion, which is monitored more closely than futures by some dealers, declined $13.54, or 0.8%, to $1,699.08 by 14:00 ET (18:00 GMT).


Sunil Kumar Dixit, chief technical analyst at SKCharts.com, warned that despite the weekly increase, gold's value may continue to decline if the dollar continues to rise and U.S. bond yields accompany it.


If gold's rejection from the $1,730 resistance zone is confirmed by a break below the $1690-$1685 range, bears would have an easy target of $1,560, according to Dixit. This represents the Fibonacci retracement of 50% of the long-term uptrend from $1,046 to $2,073.


The Dollar Index, which compares the U.S. dollar to the euro and four other currencies, increased for a third straight day, reaching a session high of 112.7 and inching closer to 20-year highs reached a week earlier.


The yield on 10-year U.S. Treasury notes reached a one-week high of 3.906%, just missing September 27's 11-year high of 4.019%.


The dollar and bond yields rose after it was announced that U.S. corporations added 263,000 jobs in September, slightly more than what economists had predicted. The unemployment rate in the United States decreased to 3.5% in September from 3.7% in August, offering an ongoing challenge to the Federal Reserve's fight against inflation.


In an effort to battle inflation, 92% of experts anticipate that the central bank will increase interest rates by 75 basis points for the fourth straight time in November.


Rate increases are antagonistic to risk assets, particularly dollar-denominated commodities, because they increase the transaction and acquisition costs for euro and other currency traders.


Investors perceive gold as a viable alternative to the dollar, despite its reputation as a safe haven. Herein lies the problem with gold. As a result of the Federal Reserve's decision to raise interest rates by 300 basis points this year, from a starting point of just 25 basis points, the dollar has been persistently heading toward two-decade highs.


It is widely anticipated that the Fed will raise interest rates by at least 50 basis points in December, bringing the total increase for the year to 425 points.

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