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S&P 500 comes off record high, USD/JPY remains sidelined and silver price bid
S&P 500 comes off record high amid weak US employment data while USD/JPY remains sidelined despite heightened political uncertainty and silver price stays bid.
Macro news
The Japanese yen weakened notably after Prime Minister Ishiba’s resignation, sliding 0.5% against the US dollar. The currency also touched multi-year lows against the euro and sterling, reflecting investor concern over Japan’s mounting political uncertainty. The sudden leadership vacuum has added to pressures already weighing on the yen, underscoring the fragility of sentiment toward Japan’s economic outlook.
The Bank of Japan’s (BoJ) future policy direction has become less clear in light of these developments. Market participants worry that a new prime minister may support a looser monetary stance, potentially undoing recent efforts to tighten conditions. Former foreign minister Toshimitsu Motegi has already announced his candidacy, making him the first contender in what is expected to be a closely watched race for leadership.
Japanese equities, however, reacted positively to the weaker currency. The softer yen boosted the outlook for exporters, helping stocks move higher, while government bonds remained largely stable. Super-long bond yields, meanwhile, continued to hover near record highs, a sign that investors remain cautious about long-term fiscal and monetary risks.
Across Europe, political turbulence deepened in France. Prime Minister François Bayrou is widely expected to lose a confidence vote, a setback that could strain both government bonds and the country’s credit ratings. The prospect of further instability adds to the already complex political backdrop facing European markets.
In the United States (US), the dollar stayed under pressure following a weaker-than-expected jobs report. Futures markets now fully price in a Federal Reserve (Fed) rate cut in September, with traders assigning a 10% probability to a larger 50 basis point (bp) move. Attention is now firmly on Thursday’s US consumer price index (CPI) release, which investors view as the decisive test for whether the Fed will deliver a standard or more aggressive cut later this month.
S&P 500 hovers below record highs
The S&P 500 is trading back in the 6500 region, having come off Friday's 6532 record high following Friday's substantially weaker-than-expected US non-farm payrolls (NFPs).
The late August high at 6508 may act as resistance and the mid-August high at 6481 as minor support.
A rise above last week's all-time high at 6532 would likely target the 6600 region whereas a fall through 6481 Friday's low at 6444. Failure there would have at least short-term bearish implications with the April to September uptrend line at 6423 being eyed.
S&P 500 daily candlestick chart
USD/JPY continues to range trade
USD/JPY once again sideways trades, having briefly dipped to ¥146.82 on Friday. Further range trading between the ¥146.22 mid-August low and below the 200-day simple moving average (SMA) at ¥148.78 and the mid-July high at ¥149.18 seems to be at hand.
Were a rise above ¥149.18 to be witnessed, the August peak at ¥150.92 would be back in sight.
Minor support is now seen along the 55-day SMA at ¥147.33, below which lies Friday's low at ¥146.82. It is not expected to be revisited early this week.
USD/JPY daily candlestick chart
Silver still eyes its 13-year high
The price of silver remains sidelined while trading above Thursday's $40.4074 per troy ounce low.
The 3 and 5 September highs at $41.4160 - $41.4730 remain in sight while support at $40.4074 underpins. If overcome, the August 2011 peak at $44.2183 and the April 2011 high at $49.8142 may be next in line.
Immediate upside pressure will be maintained while Thursday's low at $40.4074 underpins. If not, the psychological $40.0000 region may be revisited.
Silver daily candlestick chart
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