Weekly Market Strategy - December 18, 2024 (Wed)

The U.S. CPI that was in focus last week came in at 2.7% as expected, rising from last month's 2.6%, but had no significant impact on USD/JPY. However, U.S. long-term interest rates rose throughout the week, and the dollar index similarly strengthened. Combined with growing expectations that the Bank of Japan may not raise rates at tomorrow's decision-making meeting, the yen weakness continued, and USD/JPY ended the week bought up to 153.614. This trend continued at the start of this week, with the pair extending gains to the mid-154 yen level. USD/JPY continues to rise ahead of the FOMC and Bank of Japan's monetary policy decision meeting, but caution has emerged regarding the possibility of an unexpected rate hike by the BOJ, with the upper level capped at the mid-154 yen range. Going forward, a sell strategy is recommended on any rallies. Sell above 155 yen. Stop loss at 156.8 yen, take profit at the 150 yen level.

WTI crude oil futures temporarily rose to the 71 dollar level late last week due to escalating geopolitical risks in the Middle East, but given concerns about weakening global demand led by China and awareness of oversupply in global crude oil, the market has fallen sharply again this week, breaking below 70 dollars. The fundamentals for WTI crude are weak, but with geopolitical risks present, it is difficult to sell. Rather, consider buying on dips? Near the lowest level of the year around 9/10, the 65 dollar level is long. Take profit at the 72 dollar level, stop loss below 60 dollars.

Gold jumped to 2,760 dollars last week on news of China resuming gold purchases for the first time in six months, but fell to approximately 2,640 dollars per ounce yesterday ahead of tomorrow's FOMC meeting results.

From a long-term perspective, gold below 2,600 dollars is a buy. Short-term: short at 2,725 dollars, stop loss at 2,800 dollars, take profit at 2,550 dollars.