FX Analysis – Yen surges on hawkish BoJ, Gold holds key level, AUDUSD bounces off key support

Equities were green across the board in Thursday’s session, led by the Nasdaq which was up almost 200 points on renewed AI optimism after Google unveiled its newest AI model, Gemini. But it was the FX space where the big moves happened.

JPY surged to have its best day of 2023 on the back of hawkish commentary from Bank of Japan Governor Ueda hinted at the end of the Central banks easy money policies, this saw a flash crash in USDJPY to 141.60 before the pair found some support at the 200 Day MA. A big driver of this pair has been the carry trade, traders cashing in the difference between US and Japanese yields, so talk of a hike in rates in Japan will be a big factor in where this pair goes next.

The move in USDJPY also rippled across other USD crosses with AUDUSD performing particularly well on the Dollar dip, a risk on market sentiment and a rise in Iron ore prices. AUDUSD tested the major support at the top of its Sep-Nov range before bouncing strongly through its 200 day MA to reclaim a 66 handle.

Gold continued to hold the key 2009 USD an ounce support level after a modest up session. The gold bulls may be a little disappointed with the gains though considering the drop in the USD on Thursday and will be watching this key level closely coming into today’s non-farm payroll report.

Todays NFP will be the last big figure before next weeks FOMC so expect some volatility if we get a number outside of the expected range.