Gold slumps to $4,350 as JPY remains strongest

Geopolitical tensions and inflation fears weighed on markets, even as the Euro edged higher and the Yen sustained its strength.

Market snapshot

• Our proprietary MRS sits at 65, up from 63 in each of the last two sessions, indicating readiness for market movement, while the CTS is 75, barely moved from Tuesday's 76. The FSI registers at 67, signaling a 'Greed' sentiment in the market.
• On an intraday basis, the Japanese Yen is ranked as the strongest currency, while the British Pound shows as the weakest major. That ends the New Zealand Dollar's two-session run at the top.

Major currency moves

• The Euro ground higher, moving above the 1.1600 level, as traders looked ahead to Thursday's European Central Bank (ECB) rate decision — the main refinancing rate is forecast to move from 2.40% to 2.65% — with Christine Lagarde due to speak today.
• The Japanese Yen maintained its strength, emerging as the strongest currency on our gauge. This follows a generational wage print reported yesterday and a near five-year high in Japan's factory mood, per Reuters Tankan. Against the dollar it ended Tuesday around 153.75, still below the 155.00 support that gave way on Monday for the first time since February.
• The British Pound came under pressure, ranking as the weakest major, despite navigating a hawkish hearing and what headlines described as the priciest gilt sale.
• The Australian Dollar faced headwinds described as an "Oil wall" amid prevailing oil-driven inflation concerns and a looming Fed decision.

Commodities and risks

• Gold slumped to trade near $4,350, extending yesterday's decline. This move came amid escalating oil-driven inflation fears and ahead of Friday's US CPI, forecast at 0.4% month-over-month against 0.1% previous. It keeps the metal inside the range Friday left marked: last Wednesday's $4,282 low against the $4,500 that capped it on Thursday.
• The United States struck Iranian oil tankers near Kharg Island, in response to attacks on US ships. West Texas Intermediate (WTI) crude extended gains for a third straight session on it, trading around $92.30 in Asian hours after clearing $92.00 on Tuesday on Strait of Hormuz supply concerns — its highest since 23 July.
• Canada's Section 338 retaliation, which took effect on Tuesday across roughly 700 lines of American goods, drew a response within the day: the White House published orders excluding Canadian products and alcoholic beverages from importation, and headlines reported a ban covering Canadian autos, dairy and alcohol.
• The dollar index spent Tuesday near 99.00, off a two-week low. That was the first American close since Friday, but the line it lost on Thursday — its 200-day average — is still unresolved.