The yen extended Monday’s gains to reach its highest level since February, driven by growing market expectations that the Bank of Japan will raise interest rates next week.
The yen strengthened 0.6% against the dollar to 153.46, following a 1.2% rise on Monday. The yen’s strength was also supported by speculation about potential changes in asset allocation by Japan’s government pension investment fund, as well as some traders pointing to low liquidity during Monday’s U.S. holiday period as another contributing factor.
Oil prices held their gains, with Brent crude trading near $97 per barrel and West Texas Intermediate above $92 per barrel. Traders are closely watching details of an agreement between Iran and Oman regarding shipping management in the Strait of Hormuz. As higher oil prices increase pressure on central banks to tighten monetary policy, global equities may be entering a period of consolidation.
Rising energy prices have intensified investor concerns over inflation, prompting reassessment of the likelihood of tighter monetary policy. This week sees a heavy release of U.S. economic data, including Friday’s inflation report, which could prove pivotal in determining whether the Federal Reserve raises or maintains interest rates.
The yen has gained around 4% this month, making it the best-performing currency among G10 currencies.
The recent rally suggests that the yen’s upward movement—initially triggered by interventions from U.S. Treasury Secretary Scott Bessent and Japanese Finance Minister Mayumi Kajiyama—may now be gaining momentum on its own. Underlying support comes from market expectations for tighter monetary policy by the Bank of Japan, while breaking above the 155 level has further reinforced technical bullish momentum.
In commodities, copper prices surged to a record high on the London Metal Exchange, continuing a multi-week rally. Earlier, markets anticipated President Trump would expand tariffs on refined metal imports. Gold prices also rose in early Tuesday trading.
Plugin Case Analysis
Gold: After breaking above 4434, the price launched an offensive toward 4450. Our plugin signal yesterday advised buying after a pullback into the blue zone following the breakout, which largely aligned with the subsequent move. Today, we continue monitoring signals for a breakout in momentum, targeting 4450 and 4480. If there is a sweep above 4400, we should also watch for a rebound signal.
(Gold 15-minute chart)
Nasdaq: Overnight prices remained range-bound around 29,500. With improved intraday liquidity, our primary focus is whether the index can hold above 29,550/29,500 and push toward 29,800. If the rally fails, we should also monitor a potential bounce off the 29,400 support level.
(Nasdaq 15-minute chart)
Crude Oil: Yesterday, after entering the yellow zone, the price showed signs of liquidation followed by a pullback. However, today the effectiveness of this zone has weakened. We need clearer signals before considering further short positions.
(Crude Oil 15-minute chart)
Key Financial Data and Events Today:
18:00 U.S. August NFIB Small Business Confidence Index
23:00 U.S. August New York Fed 1-Year Inflation Expectations
