Financial Analyst/Content Writer, RADEX MARKETS
Lawrence J. came from a strong technical and engineering background before pivoting into a more financial role later on in his career. Always interested in international finance, Lawrence is experienced in both traditional markets as well as the emerging crypto markets. He now serves as the financial writer for RADEX MARKETS.
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The week has barely started, and yet history is already being written. Gold once again started the week with a gap up, leapfrogging the $5,000 threshold and pushing higher still as the Asian session got underway. The precious metal rose almost $400 last week, which represents the largest weekly gain in absolute terms ever seen, but gold is evidently hungry for more, peaking to highs of $5,090 this morning. Silver also opened the week with a bang, from last Friday’s close of $103 per ounce, the white metal rose straight to $109 within hours of the opening bell after printing a sizeable gap of its own. The weekly chart for silver now looks like a textbook parabola, and incredibly, the metal is already up 50% so far this year. Platinum is also breaking records this morning, rising the better part of $100 and pushing north of $2,800 per ounce. Finally, palladium touched $2,100 earlier today, matching prices not seen since 2022.
There is something interesting brewing in currency markets. Traders may have noticed the sudden move in the yen last Friday, which saw a 1.6% swing in favour of the beleaguered Japanese currency. The yen has been bleeding for years at this point, but with a new and dramatically different government in place, the nation’s currency may finally see an end to its relentless depreciation. Speculation is rapidly mounting that Japanese authorities may intervene to defend the yen, with potential support from the US. On Friday, the Federal Reserve Bank of New York contacted financial institutions regarding the yen’s exchange rate. Such a move is very rare, and points to a coordinated effort between the US and Japan to prop up the yen.
The most famous historical example of such an intervention dates to the Plaza Accords of 1986, which resulted in a global effort to halt the rise in the US dollar. Since last year, economists have been floating the idea of a new type of accord, informally called the “Mar-a-Lago Accord”, the goal of which would be to intentionally devalue the dollar. A weaker dollar would ease US government debt repayments and make US exports cheaper, thereby improving the country’s trade balance. The dollar currency index has plummeted in light of recent developments, hitting lows of 97 early this morning, and currency markets remain on high alert for any further signs of a joint intervention. Both the dollar and the yen are crucial pillars of global capital flows, the former because of its status as world reserve currency, the latter as a vast source of funding via carry trade. Any sudden rebalancing between the two could have far-reaching consequences for financial markets at large.
A lot going on behind the scenes this week. Wednesday will see both the Bank of Canada and the Federal Reserve convene to establish the interest rate on their respective currencies, and while neither is expected to budge, the subsequent press conference and comments from Fed board members will define expectations for the next FOMC meeting in March. Jerome Powell only has a few months left as Chairman, after which the Fed may strongly change course to lower rates. The earnings calendar heats up this week, with Microsoft (MSFT), Meta Platforms (META), Tesla (TSLA) and ASML Holding (ASML) all reporting on Wednesday, although with the exception of ASML, traders will have to wait until after the closing bell to see the reports. On Thursday, Apple (AAPL), Visa (V) and Mastercard (MA) all report after market close, while Exxon Mobil (XOM) reports before market open on Friday.
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