Yen and Gold Shine as Uncertainty Grips Global Economy (02.05.2025)

Japanese Yen Surges on Wage Data

The Japanese yen strengthened past 154 per dollar on Wednesday, its highest in seven weeks, as strong wage and services data fueled expectations of a more aggressive Bank of Japan policy. Japan’s real wages rose for a second month in December, with nominal wage growth hitting a nearly 30-year high due to winter bonuses. The January services PMI was revised up to 53 from 52.7.

In January, the Bank of Japan raised interest rates and signaled openness to further hikes if economic and inflation trends align. Externally, the yen gained as the US dollar weakened after Washington delayed tariffs on Mexico and Canada, while trade tensions with China eased.

Key resistance stands at 155.90, with potential targets at 158.70 and 160.00. Support is at 153.00, followed by 151.90 and 149.20.

Gold Breaks Records Above $2,850

Gold surged past $2,850 per ounce, hitting a record high as investors turned to reliable long-term assets with fears that the US-China trade war could slow global growth. While President Trump delayed tariffs on Mexico and Canada, he imposed a 10% duty on Chinese imports, prompting Beijing to announce retaliatory tariffs on US energy products effective next week.

Adding to the uncertainty, Trump suggested US control over the Gaza Strip for reconstruction. Meanwhile, interest rate futures signaled rising expectations for two Fed rate cuts this year, a sharp shift from last month’s outlook. Weaker-than-expected job openings in the JOLTS report and a six-month low in factory orders reinforced this sentiment.

Technically, resistance levels stand at 2879, 2917, and 2950. Support is at 2830, followed by 2790 and 2760.

GBP/USD Stuck Between Fed Policy and BoE Decision

The USD Index (DXY) remains near its weekly low as expectations grow for further Fed monetary easing. Tuesday’s JOLTS report signaled a cooling US labor market, increasing speculation of rate cuts despite inflation concerns.

Global sentiment is positive after President Trump delayed tariffs on Canadian and Mexican imports, easing trade war fears. This risk-on mood weakens the USD’s safe-haven appeal while supporting GBP/USD. However, lingering US-China trade tensions and the Fed’s hawkish stance limit USD losses, keeping GBP/USD gains in check.

Traders await Thursday’s BoE policy meeting with key resistance levels at 1.2500, 1.2600, and 1.2650. Support stands at 1.2340, followed by 1.2265 and 1.2100.

Manufacturing Data Fuels Silver's Rise

Silver rose above $31.5 per ounce, near its highest since early December, as easing trade war fears and strong manufacturing data stimulated demand. While Trump imposed 10% tariffs on China and 25% on Canada and Mexico, a delay in Mexico’s tariffs eased protectionist concerns. The ISM reported improving U.S. factory activity, reinforcing silver’s industrial demand outlook.

The Silver Institute projected a fifth market deficit in 2025, with strong industrial and retail investment demand outweighing weaker jewelry and silverware demand.

Key resistance levels are 32.50, 33.00, and 33.50. Support stands at 31.80, followed by 30.90 and 30.20.