Shifting U.S. Rate Outlook Reshapes Global Markets Ahead of a Dense Data Calendar

During the past week, financial markets continued to reassess expectations for U.S. interest rates, keeping pressure on American equities. Gold fell by more than 3%, reaching its lowest level since August, while stronger-than-expected U.S. GDP growth helped keep long-term U.S. Treasury yields elevated.

In Japan, the Bank of Japan’s Summary of Opinions from its September monetary policy meeting revealed differing views among policymakers on the pace of additional tightening. Core consumer price inflation in Tokyo rose 2.7% year on year, above the 2.4% forecast, reinforcing expectations for further Japanese rate increases.

Friday’s U.S. employment report came in weaker than anticipated. Nonfarm payrolls increased by only 29,000, compared with a forecast of 90,000, while wage growth also disappointed. Traders reduced expectations for another Federal Reserve rate hike in October, but the market reaction was limited, with the U.S. 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 investor sentiment. The Dow Jones Industrial Average held near the 51,000 mark but remains in a downtrend for now. A sustained move above its 10-day moving average could open the door for a broader recovery. Resistance lies at 52,000, 52,700, 53,000, 53,750, 54,000 and 54,500, while support is seen at 51,000, 50,000 and 49,000.

Japanese Stocks

The Nikkei 225 rose strongly last week, supported by gains in AI- and semiconductor-related shares as investors bet on growing demand for artificial intelligence infrastructure. The index has now moved close to resistance at 70,000. After such a rapid advance, it may pause this week, particularly with few major economic reports due. A break above 70,000 could allow further upside, while a failure to gain ground may prompt traders to take profits. Resistance is at 70,000, 71,000, 72,000 and 74,000, while support is located at 68,000, 67,000, 66,000, 65,000, 64,000 and 63,000.

USD/JPY

Buyers continued to support the USD/JPY pair, focused on the wide gap between U.S. and Japanese interest rates, even as officials warned of the possibility of intervention. The 158 level remains technically important. With the 10-day moving average flattening and few major economic releases due this week, USD/JPY could remain range-bound, 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 earlier last week as expectations of higher U.S. interest rates and elevated long-term U.S. Treasury yields weighed on prices. The market has since found some short-term support, which could support a recovery toward the 10-day moving average early in the week. That rebound may offer a selling opportunity while the broader downtrend remains intact. 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 pressure. The move helped push WTI lower, but concerns about supply from the region remain. Prices are still volatile below $100, and selling rallies toward the 10-day moving average has worked well in recent sessions. However, a sharp and sustained decline looks unlikely without progress toward 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 for a further rate hike. The price is approaching recent resistance as speculative demand improves, with traders looking for a return to $100,000 by year-end. Buying on weakness remains the preferred strategy 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

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