Market Sector Scanner: U.S. Shutdown Has Little Impact as Yen Strengthens Ahead of New Japanese Prime Minister
The U.S. government shutdown caused minimal market impact, while gold hit record highs and the yen strengthened on expectations of a Bank of Japan rate hike under the new prime minister. Traders now turn their focus to Fed Chair Powell’s speech later this week.
The U.S. government shutdown was the main story last week, but its impact on financial markets was limited, apart from the delay in releasing employment data. U.S. stocks remained strong as investors increased expectations for easier U.S. monetary policy, while gold climbed to record highs on safe-haven demand. In Japan, the yen strengthened as speculation grew that the Bank of Japan may raise interest rates ahead of the upcoming vote to choose the new prime minister.
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Key Events Calendar for October 6 – 10
Market Sector Scanner
Forex Market
USD/JPY
Last Week Recap
The USD/JPY turned lower as traders reduced risk ahead of the election of Japan’s new prime minister and on expectations that the Bank of Japan could raise interest rates sooner than expected. A lack of strong U.S. data also limited dollar demand and added to downward pressure.
Technical Picture
The upper Bollinger Band acted as strong resistance, while the wide gap from the moving average encouraged sellers to take profits. Support held around 146, and together with the lower Bollinger Band, this suggests potential for a short-term recovery as the pair remains range-bound.
Outlook This Week
A potentially volatile week lies ahead as markets assess how the new Japanese prime minister may influence monetary policy and the yen. If support near 146 continues to hold, a rebound toward the 148–149 area appears likely, though volatility could remain high.
GBP/JPY
Last Week Recap
GBP/JPY came under pressure last week as yen strength and resistance near the 200 level encouraged sellers to push the market lower. Although the U.K. GDP data beat expectations, its positive impact was limited, and the pair remained confined within its recent range.
Technical Picture
Support emerged near the lower Bollinger Band and around the 197 level toward the end of the week, keeping the market in a tight consolidation zone.
Outlook This Week
This week’s direction will largely depend on expectations for economic policy under Japan’s new prime minister. If sentiment remains stable, a test higher toward the 200 level again appears the most likely scenario.
EUR/USD
Last Week Recap
It was a quiet week for EUR/USD as the U.S. government shutdown slowed market activity and delayed the release of key employment data. September inflation came in slightly above expectations, reducing hopes for an early interest rate cut from the Federal Reserve.
Technical Picture
The pair is trading near the middle of the Bollinger Bands, with the 10-day moving average moving sideways, indicating that range-bound conditions are likely to continue.
Outlook This Week
With no major economic data scheduled and few surprises expected from Federal Reserve speakers, range trading between 1.1600 and 1.1800 appears to be the best strategy for the week ahead.
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Equities
U.S. Stock
Last Week Recap
The Nasdaq continued to lead U.S. equity markets higher last week, as investors largely shrugged off the U.S. government shutdown and instead focused on expectations that an interest rate cut later this month remains unlikely. Optimism around the strength of the U.S. economy helped keep buying interest steady throughout the week.
Technical Picture
The 10-day moving average continues to point higher, reflecting an ongoing uptrend. However, the slope of the moving average has begun to flatten slightly, suggesting that upward momentum may be weakening in the near term.
Outlook
The overall trend remains positive, favoring medium-term traders who stay positioned on the long side. For short-term traders, range trading or looking for selling.
Commodities
Gold
Last Week Recap
Gold rose again last week, bringing total gains for September close to 10%. Expectations of further U.S. interest rate cuts and continued speculative buying helped drive prices higher, extending the strong upward momentum seen in recent weeks.
Technical Picture
The uptrend remains very strong, with the upper Bollinger Band acting as the main barrier to further gains in the short term. The 10-day moving average continues to provide solid support, reinforcing the bullish structure of the market.
Outlook This Week
Following the uptrend remains the preferred strategy as long as prices stay above the 10-day moving average. Short-term traders may look for selling opportunities near the upper Bollinger Band if the market shows signs of short-term exhaustion.
Markets are likely to focus on political developments in Japan this week, as the potential economic impact of the new prime minister could lead to higher volatility in the USD/JPY and Nikkei. With few major data releases scheduled, attention will turn to the upcoming speech by U.S. Fed Chair Powell, which investors will watch closely for clues ahead of the expected U.S. interest rate cut later this month.
