Last week, markets continued to adjust to expectations of higher U.S. interest rates, keeping U.S. equities under pressure. Gold fell more than 3%, reaching its lowest level since August, while stronger-than-expected U.S. GDP growth helped keep long-term U.S. bond yields elevated.
In Japan, the BOJ’s Summary of Opinions from its September monetary policy meeting highlighted differing views on the pace of further tightening. Tokyo core CPI rose 2.7% from a year earlier, exceeding the 2.4% forecast and supporting expectations of further Japanese interest rate increases.
Friday’s U.S. employment report was weaker than expected. Nonfarm payrolls increased by just 29,000 against a forecast of 90,000, while wage growth also disappointed. Traders reduced expectations of another Fed rate increase in October, but the market reaction was limited, with the dollar recovering its initial losses.
Markets This Week
U.S. Stocks
U.S. equities remained under pressure last week as expectations of higher U.S. interest rates and elevated WTI crude oil prices weighed on sentiment. The Dow held near 51,000 but remains in a downtrend for now. A move above its 10-day moving average could open the way for a further recovery. 52,000, 52,700, 53,000, 53,750, 54,000 and 54,500. Support is seen at 51,000, 50,000 and 49,000.
Japanese Stocks
The Nikkei 225 rose strongly last week as AI- and semiconductor-related shares gained on hopes of growing demand for AI infrastructure. The index is now close to resistance at 70,000. After such a quick rise, it could pause this week as few major economic reports are due. A break above 70,000 could lead to further gains, while a failure to move higher may encourage traders to take profits. Resistance is at 70,000, 71,000, 72,000 and 74,000. Support is at 68,000, 67,000, 66,000, 65,000, 64,000 and 63,000.
USD/JPY
USDJPY buyers continued to support the pair, focusing on the wide gap between U.S. and Japanese interest rates, while officials warned of possible intervention. The 158 level remains important on the chart. With the 10-day moving average flattening and few major economic releases this week, USDJPY could stay in a range, creating opportunities to buy near support and sell near resistance. Resistance is at 158.00, 159.00 and 160.00 while support is at 157.00, 156.00, 155.00, 153.00, 152.50, 152.00 and 150.00.
Gold
Gold broke below important support early last week as expectations of higher U.S. interest rates and elevated long-term U.S. bond yields weighed on prices. The market has since found some short-term support, which could lead to a recovery towards the 10-day moving average early this week. That rebound may offer a selling opportunity while the downtrend remains in place. Resistance is at $4,400, $4,500, $4,600, $4,650, $4,700, $4,775 and $4,900, while support is at $4,225, $4,200, $4,125 and $4,100.
Crude Oil
With Middle East negotiations stalling and high oil prices weighing on the global economy, the G7 announced plans to release 100 million barrels of crude oil and diesel reserves over four months to ease supply pressures. This helped push WTI lower, but concerns about supplies from the region remain. Prices are still volatile below $100, and selling rallies towards the 10-day moving average has worked well recently. However, a sharp, sustained fall looks unlikely without progress towards peace in the Middle East. Resistance is at $100, $105, $110 and $115, while support is at $90, $85, $80, $75, and $67.50.
Bitcoin
Bitcoin continued to climb after soft U.S. jobs data reduced expectations of a further rate hike. The price is approaching recent resistance as speculative demand improves, with traders looking for a move back to $100,000 by the end of the year. Buying on weakness looks like the preferred approach as long as support at $82,000 holds. Resistance is at $88,000, $90,000, $95,000 and $100,000, while support is at $82,000, $75,000, $65,000, $62,000, $60,000, $55,000 and $50,000.
This Week’s Focus
- Monday: Japan S&P Global Services PMI, Europe HCOB Eurozone Composite PMI, U.K. S&P Global Composite PMI, U.S. S&P Global Services PMI
- Tuesday: U.K. S&P Global Construction PMI, E.U. Retail Sales, U.S. Trade Balance
- Wednesday: Australia Building Approvals, U.K. Lloyds House Price Index, U.S. FOMC Meeting Minutes
- Thursday: Japan Current Account
- Friday: Japan Household Spending, U.S. Michigan Consumer Expectations
