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Yen Falls as Wall Street and Crude Oil Prices Gain, AUD/USD May Rise

Yen Falls as Wall Street and Crude Oil Prices Gain, AUD/USD May Rise

Daniel Dubrovsky, Strategist

Japanese Yen, US Dollar, Crude Oil, OPEC, Wall Street, Coronavirus – Asia Pacific Market Open

Japanese Yen and US Dollar Sink as Wall Street and Crude Oil Prices Gain

The anti-risk Japanese Yen and similarly-behaving US Dollar were some of the worst-performing major currencies on Wednesday. Market sentiment broadly improved as the Dow Jones and S&P 500 closed 3.44% and 3.41% higher. The growth-linked Australian Dollar outperformed. This rosy session also contrasted starkly with Tuesday’s relatively dismal one, a reflection of elevated volatility levels around the coronavirus.

Today’s performance may have been due to a combination of virus stabilization bets and a rally in crude oil prices. Earlier in the session Anthony Fauci – Director of the National Institute of Allergy and Infectious Diseases – said that the country may start seeing the beginning of a turnaround beyond this week. He added that anticipated COVID-19 fatalities appear to look “less than thought” previously.

US President Donald Trump later in the day reiterated plans to reopen the country. He said that the could do it in phases and that they “may be ahead of schedule”. This is a Democrats were reportedly seeking at least US$500 billion the next stimulus bill to help support an economy that is being battered by social distancing measures to help contain the spread of the virus.

Meanwhile energy securities propelled equities into the close as investors bet on oil output cuts. Russia hinted that it is ready to reduce production by 1.6 million barrels per day. Afterwards, Algeria reported that OPEC+ cuts could reach 10m b/d. Oil prices surged on the news. Markets are awaiting today’s OPEC meeting at 14:00 GMT. Saudi Arabia hinted that it would like to see other major oil producers, such as the US, to join in on price stability efforts.

Thursday’s Asia Pacific Trading Session

With that in mind, we may see Asia Pacific stock indexes follow Wall Street higher. Such a rosy session could continue benefiting the Australian Dollar while sapping the appeal of the haven-linked Greenback and Yen. The Reserve Bank of Australia will be releasing its semiannual financial stability review at 1:30 GMT. Further insight into how the country is faring amid the pandemic could stoke AUD/USD volatility.

Japanese Yen Technical Analysis

USD/JPY continues to consolidate within a narrow range since the onset of the new week. Support sits below at 108.48 with resistance as the 23.6% Fibonacci extension at 109.38. The dominant upward bias appears to be held intact by rising support from last month – red line below. A drop through it exposes 106.89. Otherwise uptrend resumption places the focus on the 38.2% level at 110.92.

USD/JPY 4-Hour Chart

Yen Falls as Wall Street and Crude Oil Prices Gain, AUD/USD May Rise

Chart Created Using TradingView

--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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