Euro rose in European trade against yen, resuming gains after a two-day hiatus and approaching a 15-year peak again.

The common currency rose above 160 yen amid concerns about a widening policy gap between Europe and Japan as the European Central Bank opens the door for more interest rate hikes while Bank of Japan remains committed to an ultra-easy monetary policy.

EUR/JPY rose 0.8% to 159.02, with a session-low at 157.77, after losing 0.35% on Friday, the second loss in a row on profit-taking off 15-year highs at 159.33.

EUR/JPY lost 0.4% on profit-taking last week, the first weekly loss in three weeks.

European Rates

The ECB linked any potential policy tightening and interest rate hiking in the future to upcoming economic data.

As oil prices rallied again recently, consumer prices are expected to rally once more, raising inflationary pressures on ECB policymakers. 

Therefore if inflation remained stubborn, chances for a 0.25% ECB rate hike this year will rise once more.

BOJ

Recent data showed Tokyo consumer prices remained to normal levels, therefore removing the need for any changes in monetary policies.

Indeed, Bank of Japan announced back in July that it's holding on to a flexible monetary policy with negative interest rates as Japan's economy requires more assistance.

Interest Rate Gap

The current interest rate gap between Europe and Japan stands at 435 basis points, and might rise to 460 points if the ECB raised interest rates by 25 basis points in September.

Gold prices fell in European trade on Monday on track for the sixth loss in a row, plumbing a five-month nadir as US 10-year treasury yields rally while demand on non-yielding assets weaken.

The Federal Reserve is expected to raise interest rates once more this year while maintaining interest rates high for most of 2024.

Prices Today

Gold prices fell 0.25% to $1,884 an ounce, the lowest since March 13, with a session-high at $1,894, while gold prices fell 0.1% on Friday, the fifth loss in a row as the dollar tumbled.

Overall, the precious metal lost 1.3% last week, the third weekly loss in a row as dollar and US yields rose.

US Yields

US 10-year treasury yields rose 1.25% on Monday, resuming gains after a hiatus on Friday and approaching a ten-month high at 4.328%.

Higher US yields impact gold prices negatively, and the gains come after strong US data and bullish Fed remarks, which bolstered the case for another 0.25% Fed rate hike this year.

US Rates

The Federal Reserve is likely to raise interest rates once more this year according to economists polled by Reuters.

Now investors await a crucial speech by Fed Chair Jerome Powell on Friday at Jackson Hall alongside many other global central bank governors.

The SPDR

Gold holdings at the SPDR Gold Trust rose 2.6% tones On Friday to a total of 890.1 tones, away from 887.50 tones, the lowest since January 2020.

Euro rose in European trade against a basket of major rivals away from a six-week trough and on track for the first profit in seven days on short-covering.

Investors await important European data later this week, especially data on the manufacturing and services sectors for August, which will provide important clues on the health of the European economy for the third quarter of the year.

Investors also await important remarks by European Central Bank President Christine Lagarde at Jackson Hall, looking for new clues on the future of interest rates in the euro zone.

EUR/USD rose 0.2% to 1.0888, with a session-low at 1.0865.

Euro lost 0.1% against dollar on Friday, the sixth loss in a row, plumbing a six-week trough at 1.0845, after losing 0.7% last week, the fifth weekly loss in a row, and the longest such streak of weekly losses since February 2022 on renewed concerns about the gap in interest rates between Europe and the US.

European Rates

The ECB linked any potential policy tightening and interest rate hiking in the future to upcoming economic data.

If inflation continued to taper off while manufacturing slowed down, the ECB is likely to pause policy tightening for some time.

As we mentioned above, investors now await important European manufacturing and services data, in addition to a speech by ECB President Christine Lagarde to gauge the path ahead more clearly.

Euro stabilized against most major rivals after forecast-matching inflation data for last month.

Government data showed euro zone consumer prices settled at 5.3% in July, same as before.

Core prices, excluding food and energy, stabilized as well at 5.5%.

On trading, EUR/USD settled positively at 1.0873 as of 21:20 GMT.

Loonie 

CAD/USD fell 0.1% as of 21:21 GMT to 0.7378. 

Greenback 

The dollar index fell 0.1% as of 21:00 GMT to 103.4, with a session-high at 103.6, and a low at 103.2. 

Pressures are mounting on riskier asserts as US treasury yields rallied after the Fed hinted at more policy tightening.

However, US 10-year treasury yields tapered off today to 4.228%, but remained near 2007 highs. 

Otherwise, recent court documents showed Evergrande applying for chapter 15 bankruptcy in the US.

According to Bloomberg, the court documents showed the major Chinese real estate company applied for such a request in New York.