This Week's Market Strategy – June 25, 2024 (Tuesday)

At the Bank of Japan meeting the week before last, contrary to prior expectations, it was decided that the reduction in JGB purchases would not happen immediately. In other words, quantitative easing continues. Intermittent buying of USD/JPY has continued, and the pair surged sharply from the 157 yen level to near 160 yen, ending last week. With such a rise, there is growing vigilance about intervention. Yesterday, Vice Minister of Finance Kanda stated, 'If there is excessive price movement, we will intervene.' Since 160 yen is the level of the previous intervention, the market is nervous. If intervention occurs, a sharp drop of 5-6 yen is possible. That would be a buying opportunity!

Gold rose to $2,382 last week but fell sharply on Friday. However, it remains far from our target of $2,212. In this strategy report, we expect U.S. long-term interest rates to rise this week and gold to decline sharply through end of June, so there is no change to this week's strategy. We maintain a buying stance on weakness. This is because gold's long-term outlook remains bullish!

WTI crude oil was bought up to $82 after the U.S. Energy Information Administration (EIA) crude oil and gasoline inventory data, contrary to positive expectations, fell sharply last week. Chart-wise, a decline is indicated from this week through mid-July. We believe a bottom will eventually form in the early-to-mid $70s range.

In summary, if USD/JPY surges further from here, the Ministry of Finance is likely to intervene, so we recommend buying on any dip of 5-6 yen. The intervention level may be around 162-3 yen?

Gold is a long-term buy below $2,212, but if that doesn't occur this month, it remains a buy even at the $2,300s.

Are we looking for a short-term selling opportunity in crude oil? If that doesn't materialize, we recommend longs near $75 on any weakness.