Morning Note: Yen Rises, AUD Struggles, Uber’s Q4: Key Market Insights

Japanese Yen Strengthens as Real Wages Rise and Service Sector Expands

Japan’s inflation-adjusted real wages grew by 0.6% year-on-year in December, thanks to winter bonuses, disclosed preliminary government statistics released on Wednesday. Government officials expressed optimism about sustained wage growth, and the Prime Minister underlined its importance for economic recovery. Meanwhile, the central bank justified that sustained broad-based wage hikes are essential for justifying higher borrowing costs.

The service sector of Japan expanded for the third consecutive month in January, aided by the revival of new export business from Asian demand, according to the private-sector survey. The final au Jibun Bank Services PMI was reported to rise to 53.0 from 50.9 in December, reaching the highest point since September 2023, according to S&P Global Market Intelligence. Considering this, the BOJ discussed the prospect of future rate hikes, with some policymakers warning of possible upside inflation risks.

(USD/JPY Daily Chart, Source: Trading View)

From a technical analysis perspective, the recent price action has broken through the ascending channel downward and is beginning to move in a bearish trend, as indicated by the formation of lower highs and lower lows. Currently, it is approaching the previous support zone. If this support fails to hold, the bearish momentum will likely continue, pushing the price lower to retest another support zone below.

Australian Dollar Struggles as Trade Tensions and RBA Rate Cut Bets

The Australian dollar faced difficulties in a trading session on Wednesday as the Chinese markets reopened weakly following a week-long holiday. Investors will keenly be looking to see what future plans may be made by China and the United States to soften their growing trade relationship. Whereas China announced new tariffs on U.S. goods on Tuesday, investors' response viewed it as relatively tempered. Although the stability in the yuan management post-holiday has given some support, the fact is that more U.S. tariffs are now in force against Australia's largest trading partner, which may lead to further escalated problems.

Moreover, while the Reserve Bank of Australia (RBA) is bracing for a rate cut, the Federal Reserve was widely expected to leave rates unchanged. Therefore, the Australian dollar seems likely to come under fresh pressure in the near term. In fact, the market has already priced in a 95% probability of an RBA rate cut on February 18, which would mark the first such move in four years.

(AUD/USD Daily Chart, Source: Trading View)

From a technical analysis perspective, the overall trend of the AUD/USD currency pair remains bearish, as indicated by the formation of lower highs and lower lows within the descending channel. Recently, it retested the previous support zone, found support there, and rebounded. However, it is now approaching the upper boundary of the descending channel. If the price fails to break through this resistance, it is likely to continue its bearish movement, pushing the price lower.

Will Uber's Q4 2024 Report Show Strong Gross Bookings as Expected?

Uber Technologies (UBER) is set to release its fourth-quarter 2024 results on February 5. As economic activities return to pre-pandemic levels, more people are commuting for work and other purposes. This trend may have positively impacted Uber’s performance in the upcoming report, driven by strong gross bookings. The company expects gross bookings in the December quarter to be between $42.75 billion and $44.25 billion, which is a rise of 16-20% year-on-year on a constant currency basis compared to the fourth quarter of 2023.

(UBER Shares Daily Price Chart, Source: Trading View)

From a technical analysis perspective, Uber's share price remains in a bullish trend, as evidenced by the formation of higher highs and higher lows within the ascending channel. Recently, the price rebounded from the lower boundary of the channel with strong bullish momentum. This solid bullish structure increases the likelihood of a challenge to the next rectangular resistance zone. If the price successfully breaks through this resistance, it could drive further upside movement, potentially completing the wave and reaching the upper resistance of the channel.

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Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.