Covid-19 cases are increasing across the globe. Vaccine news takes a backseat amid growing virus cases, which keeps safe-haven Japanese Yen positive.
It is a short trading week with Thanksgiving holiday on Thursday, November 26.
Janet Yellen is nominated as US Treasury Secretary. The General Services Administration (GSA) has acknowledged Mr. Biden's victory. The president-elect can now access top security briefings and will take office in January.
USD/JPY
Japanese Yen Strengthens Against the US Dollar
Japan has a resurge in coronavirus cases. However, no emergency is declared as of now in Japan. Residents are asked to stay home and come out only in emergency cases. Face masks are made compulsory. The country saw a record of 2,200 cases on Thursday. The capital city, Tokyo, is raised to an alert level. Rumours about a second cash handout were declined by Finance Minister Taro Aso.
The Japanese Prime Minister Yoshihide Suga and US President-elect Joe Biden have agreed to strengthen alliance between the two countries. They will be working together to overcome the coronavirus pandemic and address climate change issues, says PM Suga.
In the US, almost all of California is under curfew. In Texas, new cases are rising to record highs. The pandemic is causing economic damage to the country, and the greenback has been on the decline in November. US Treasury yields are declining along with the weakening dollar. The IMF has warned that global recovery across the globe is going down with increasing coronavirus cases.
The FOMC minutes are attracting attention as investors expect an increase in asset purchases. With Thanksgiving Day on Thursday being a holiday, investors are not interested in trading the currency market as it is a short week.
The USD/JPY has been slowly declining from June at ¥110 levels. In July, it reached a high of ¥108 levels. The Japanese Yen has formed a bottom at 103.35 levels in November and will be a crucial support level for this month. Low inflation in Japan has strengthened the Yen. The 105 levels remains a strong resistance level for the USD/JPY. The 50 EMA is at this level at ¥105.
The US Dollar against the Japanese Yen shows continuing strength this week. The USD/JPY currency pair is at a resistance level of 104.70. The weakening dollar is another reason for the increasing value in the Yen.
GBP/JPY
British Pound Moving Towards a Brexit Deal
The EU and UK are closing towards a Brexit deal according to reports and the British Pound has gained strength, moving up from 137.82 to 139.36 on Monday.
The UK PMI provides positive data amid Brexit worries. The GBP/JPY top at 140.00 levels is within reach and investors expect more positive news from a last-minute Brexit deal.
Sticky points continue to hinder a compromise made on the Brexit issue but the British Pound against the Japanese Yen does not give much importance to the negotiation news. Michael Barnier, the chief negotiator for Brexit from the EU says that fundamental differences affect talks with the UK in three main issues, which are level playing field, state-aid rules, and fisheries.
AstraZeneca and Oxford University have announced a Covid-19 vaccine that is 90% effective. It has boosted investor confidence.
EUR/JPY
Euro Rebounds from 123.00 Lows
The EUR/JPY has rebounded from last week's lows of 123.00. The currency pair is currently positioned at the 100 SMA, which is placed at 124.00 levels. The November peak is at 125.17 levels, which may be a resistance level for the Euro against the Japanese Yen.
The coronavirus is resurging across the European regions. Economic conditions which saw a slight improvement has reversed after the resurgence of the virus.
The EU's huge stimulus package, which was to come into effect in January, has been delayed. Hungary and Poland have objected to the $2 trillion package.
Brussels holds crucial talks with the UK for a post-Brexit trade deal. If the agreement is announced by December beginning, it may pull the EUR/GBP lower. A no-Brexit deal may affect the United Kingdom more than the Eurozone. Investors expect a last-minute negotiation to take place in negotiation.
A temporary deal is expected to extend Brexit negotiations, which brought a positive rally to the British Pound. Though nothing is officially announced about the Brexit negotiations, the market is moving on rumors. Experts, however, caution investors about more volatility in the currency market and wait for announcements before trading.
Gold Prices Breaks Below Support at $1,840/ Oz
With positive news about a vaccine from Pfizer, Moderna, and AstraZeneca, gold prices have fallen. Gold has a retracement level at $1,760, and a support at the $1,800 level. With selling pressure increasing on the yellow metal, experts say that the bull market for gold has declined.
The Japanese yen has a positive link with gold. Both have a negative correlation against the US dollar and are considered safe-havens. However, the Yen and gold do not have a 100% correlation.