This Week's Market Strategy – October 8, 2024 (Tuesday)

Last week, Prime Minister Ishiba's statement that "now is not the environment to raise rates further" during his meeting with Bank of Japan Governor Ueda caused USD/JPY to surge from the 143 yen level to above 147 yen. Following Friday's employment statistics that came in significantly better than expected, it was bought further, touching 149 yen. At the start of the week, it was bought again to the early 149 yen level, but after cautionary comments from Ministry of Finance authorities, it fell back somewhat. However, with the US dollar remaining strong and US long-term interest rates rising, USD/JPY is expected to rise to the 151 yen level. The downside 137 yen scenario has disappeared for now.

The Chinese central bank has stopped gold purchases for five months, and with the US dollar suddenly strengthening, gold's upside is becoming heavier, though geopolitical risk provides support. Gold could have one more rally to around 2,800 dollars by year-end. Long recommended on dips, but for short-term only. From late year to early new year, a pullback may occur.

WTI crude oil is at the 78 dollar level due to escalating Middle East tensions. However, China's economic deflation and Saudi production increases are powerful bearish factors.

In summary: USD/JPY – seeking selling opportunities. Short strategy at 151 yen. However, if it closes above 152 yen, exit. Downside target is 145 yen, take profits before that level. Gold – buy at 2,620 dollars short-term. Take profits at 2,800. If it breaks below 2,500, cut losses or watch cautiously. Crude oil – high probability of another decline, so short at 80 dollars. Stop loss above 84.55.