Financial markets had a relatively quiet week as investors continued to digest Fed Chair Jerome Powell’s comments from Jackson Hole. The focus shifted to political drama after President Trump announced the dismissal of Fed Governor Lisa Cook amid mortgage fraud allegations. Cook is now pursuing legal action, while Trump continues to push for greater influence over the Federal Reserve.
Economic data in the U.S. was generally positive, with durable goods orders and GDP both beating expectations, while the Core PCE Price Index matched forecasts. In Japan, Tokyo Core CPI came in at 2.5%—right in line with expectations and still above the Bank of Japan’s 2% target—while unemployment fell to a multi-year low, fueling speculation about a potential BoJ rate hike. On the global stage, Trump reignited trade tensions by slapping heavy tariffs on semiconductor imports, though chips produced domestically were granted exceptions.
Within the Fed, momentum for easier policy is growing. Governor Christopher Waller and San Francisco Fed President Mary Daly both openly supported a 25-basis-point rate cut at the September FOMC meeting. Meanwhile, Nvidia reported strong earnings that helped ease concerns about the sustainability of the tech rally. However, despite the positive corporate news, U.S. equities sold off on Friday, ending the week lower.
Markets This Week
U.S. Stocks
The Dow ended last week with a small loss as recent record highs acted as resistance after a quiet trading week. With a September rate cut all but confirmed, the market is now waiting for the next catalyst to drive direction. The rejection of recent highs and Monday’s U.S. holiday suggest the Dow is likely to trade sideways to lower ahead of Friday’s employment data. In the short term, range trading is expected, with buying on weakness favored if the 10-day moving average holds as support. Resistance levels are at 45,750, 46,000, and 47,000, while support is seen at 45,000, 44,000, and 43,000.
Japanese Stocks
The Nikkei came under pressure as higher-than-targeted Japanese inflation data increased expectations of a Bank of Japan rate hike, which is negative for stocks. A U.S. equity sell-off on Friday also dragged the index to close at the lows of the week. Further weakness is likely, so selling near the 10-day moving average looks the best strategy. Resistance is at 43,000円, 44,000円, and 45,000円, while support is at 42,000円, 41,500円, and 41,000円.
USD/JPY
The USD/JPY traded sideways last week, with selling pressure building ahead of an expected 0.25% U.S. rate cut next month. Tokyo CPI came in at 2.5%, above target, which was negative for the pair as traders look ahead to when the Bank of Japan may raise rates. The market has been stuck in a narrow range for some time, but a break looks likely, with a move lower the more probable outcome. Resistance is at 148, 149, and 150, while support is at 146 and 145.
Gold
Gold had a very strong week, testing the upper end of its recent range as expectations of U.S. rate cuts pushed prices higher. The metal reached record levels in several currencies outside the U.S. dollar, showing strong underlying demand. While the market looks overbought in the short term, buying on weakness remains the best strategy, or alternatively a short-term breakout trade above resistance at $3,450. Resistance is at $3,400, $3,450, and $3,500, while support is at $3,300, $3,250, and $3,200.
Crude Oil
WTI moved slightly higher last week as the Russia–Ukraine conflict continued and ceasefire talks made little progress. U.S. crude inventories fell more than expected, showing stronger demand. The 10-day moving average is still pointing higher, with resistance at $65. In the short term, buying on dips looks like the best strategy. Resistance is at $65, $70, and $75, while support is at $60 and $55.
Bitcoin
Bitcoin stayed under pressure last week, breaking below key support at $112,000 as speculators cut positions while ETF buying slowed. Further weakness looks likely, with the 10-day moving average above and the former $112,000 support now expected to act as resistance. Resistance is at $112,000, $120,000, $125,000, and $150,000, while support is at $105,000 and $100,000.
This Week’s Focus
- Monday: Australia Building Approvals, U.K. S&P Global Manufacturing PMI, E.U. Unemployment Rate
- Tuesday: E.U. CPI, U.S. S&P Global Manufacturing PMI, U.S. ISM Manufacturing PMI
- Wednesday: Japan au Jibun Bank Services PMI, Australia GDP, E.U. ECB President Lagarde Speaks, E.U. HCOB Eurozone Composite PMI, U.K. S&P Global Services PMI, U.S. JOLTS Job Openings
- Thursday: U.S. Initial Jobless Claims, U.S. S&P Global Services PMI, U.S. ISM Non-Manufacturing PMI
- Friday: U.K. Retail Sales, E.U. GDP, U.S. Nonfarm Payrolls
This week is expected to start quietly with U.S. markets closed on Monday for a holiday. The main focus will be Friday’s U.S. employment data, which will show how the economy is holding up under tariffs. On Friday evening, the Federal Circuit Court struck down most of President Trump’s tariffs, ruling them illegal under laws giving Congress control over tariff and tax policy. The decision has been stayed until October 14 for appeals, and the case will likely move to the Supreme Court. While the ruling won’t have a short-term impact, it could create volatility in the months ahead.
With little news before Friday, the U.S. dollar is likely to trade sideways, gold may try to push higher, and traders will watch U.S. equities closely to see if the recent selling continues.
