Expectations of BoJ Rate Hike Rise Amid Yen Strengthening

The Japanese yen led market movements last week, gaining strength as confidence grew that the Bank of Japan may soon raise rates. Speculation also intensified that the BoJ could accelerate its tightening cycle. Finance Minister Satsuki Katayama noted that policymakers are closely monitoring yen movements.

Oil prices edged higher at the week’s start amid rising supply concerns, which also fueled inflation worries. Federal Reserve Governor Christopher Waller indicated he would support maintaining U.S. rates if inflation continued to decline, contributing to a weaker U.S. dollar.

U.S. employment data exceeded expectations, with the economy adding 162,000 jobs in August versus a forecast of about 55,000. The dollar initially rallied on the news before paring its gains, while gold experienced a sharp decline.

Markets This Week

U.S. Stocks

U.S. equities are consolidating in a range‑bound pattern, pressured by elevated crude oil prices and expectations of sustained higher interest rates. With markets closed on Monday, activity is expected to stay muted for much of the week. The upcoming U.S. inflation reports on Thursday and Friday may trigger a more decisive move. Key resistance zones are 53,750, 54,000, 54,500, 55,000 and 56,000, while support levels sit at 52,700, 51,500, 51,000 and 50,000.

Japanese Stocks

The Nikkei 225 slipped modestly last week as investors priced in the likelihood of a Japanese rate hike this month, with concerns that the move could be larger than anticipated and trigger additional hikes. Nonetheless, the market rebounded on Friday, limiting declines. The 10‑day moving average has steadied, indicating range‑bound trading with a slight negative tilt for the coming week. Resistance levels are 66,000, 67,500, 69,500, 70,000 and 71,000, while support rests at 64,000, 63,000 and 62,000.

USD/JPY

USD/JPY declined markedly last week as expectations grew for more aggressive Japanese rate hikes to curb inflation, and as the prospect of additional yen‑supporting intervention sparked selling pressure. A reduced likelihood of a U.S. rate hike added further downward momentum, yet the pair found support near 155.00, a key level. It may recover early this week if it climbs back above the lower Bollinger Band. Resistance targets are 157.00, 158.00, 159.00, 160.00 and 161.00, with support at 155.00, 154.00, 152.50, 152.00 and 150.00.

Gold

Gold closed the week virtually unchanged despite volatile trading. An initial dip was driven by higher WTI crude prices, but comments from Fed Governor Waller indicating easing inflation helped gold recover. Subsequently, stronger‑than‑expected U.S. employment data prompted a sharp sell‑off. Although resistance remains near the 10‑day moving average, which now slopes downward, gold may test lower levels again this week. Resistance zones are $4,500, $4,600, $4,650, $4,700, $4,775, $4,900 and $5,000, while support levels sit at $4,350, $4,300, $4,225, $4,200, $4,125 and $4,100.

Crude Oil

WTI crude oil rose last week as ongoing supply constraints through the Strait of Hormuz persisted, bringing prices close to July highs and sustaining an upward trend. Absent progress in negotiations, the commodity could approach $100 in the near term. Nevertheless, purchasing near the 10‑day moving average may provide a more favorable entry than buying at present levels. Key resistance levels are $95, $100 and $105, with support at $85, $80, $75, $67.50, $65 and $60.

Bitcoin

Concerns over the U.S. dollar’s value drove Bitcoin to recent highs last week as market participants re‑entered. Many anticipate a move toward $100,000 in the coming months, and Bitcoin has retained much of its recent gains, indicating potential for further upside this week. Resistance zones are $82,000, $85,000, $90,000, $95,000 and $100,000, while support levels include $75,000, $65,000, $62,000, $60,000, $55,000 and $50,000.

This Week’s Focus

• Monday: U.K. Lloyds House Price Index, European Union GDP, and a U.S. public holiday.
• Tuesday: Japan’s GDP and current account data, and Australia’s NAB business confidence report.
• Wednesday: China’s trade balance, Japan’s Reuters Tankan index, China’s consumer price index and producer price index, and the U.S. Redbook report.
• Thursday: European Central Bank monetary policy statement, U.S. producer price index and existing‑home sales data.
• Friday: Japan’s producer price index, U.K. GDP and industrial production figures, and U.S. consumer price index and Michigan consumer sentiment.

The U.S. holiday on Monday is likely to produce a subdued start to the week. The European Central Bank is expected to raise rates amid persistently high inflation, drawing close scrutiny of its commentary on price pressures. U.S. CPI and PPI releases will dominate the week as market participants assess the likelihood of a rate hike later this month. Oil markets will also be pivotal as WTI approaches $100, and the yen will stay in focus amid concerns of further depreciation if recent shifts in long‑term sentiment persist.

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