Gold and USD/JPY tell me we may be in for a hawkish surprise from Fed

I have posted on Gold and USD/JPY today …here Gold looks bearish & USD/JPY – Tide may have turned in favor of bulls

Both charts indicate increased odds of a bearish move in Gold and JPY ..against the USD.

This tell me..

  • Fed is likely to surprise us with a hawkish move (possibly a rate hike in April/June).

I say this because in the scenario Gold and JPY appear vulnerable only in case of Fed rate hike.

Otherwise, all other factors remain in support of a bullish move in Gold – low rates/-ve rates, global slowdown, volatile financial markets.

On similar lines, there is little reason for a drop in JPY as of now other than increased prospects of Fed rate hike and/or increased odds of more BOJ stimulus. However, in my opinion BOJ is unlikely to ease any time soon. This leaves us with just increased odds of Fed rate hike as the reason behind bullish development on the USD/JPY chart.

Overall, Gold and JPY pointing to weakness at the same time in current scenario only means increases prospects of Fed policy tightening.


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