Nasdaq 100, Brent crude rallies continue as USD/JPY sell-off stalls

Macro update

Fed hike bets ease as Waller turns dovish: Fed Governor Christopher Waller said he would favour keeping rates unchanged this month if inflation continues to moderate, prompting markets to cut the implied probability of a September hike to around 50% from 63% a day earlier.

Global equities extend rally: MSCI’s Asia-Pacific index excluding Japan gained 1% and the All Country World Index rose for a third straight day, while Singapore’s Straits Times hit a record 5,807.16 and the Nikkei added 0.8%, although most major benchmarks remained lower on the week.

Yen eyes strongest week since July: The yen gained around 2.5% to trade at ¥155.29 per dollar, approaching the ¥155.23 level reached after July’s joint US-Japan intervention, as traders increased bets on a BOJ rate hike at its September 17-18 meeting.

Short-dated bonds find relief: Two-year Treasury yields held around 4.34% after retreating from a 20-month high, while the dollar index slipped towards a four-month low and was on track for a 0.7% weekly decline.

Brent heads for biggest weekly gain since July: Brent traded close to $98 a barrel, up over 7.5% this week, as renewed US-Iran hostilities and threats to shipping through the Strait of Hormuz fuelled concerns over global supply.

Gold steadies ahead of payrolls: Spot gold held around $4,468 an ounce after surging 2% overnight, putting the precious metal on course for a modest weekly gain as investors awaited US nonfarm payrolls at 1230 GMT for clues on the Fed’s rate path.

Nasdaq 100 rally continues

The Nasdaq 100 is seen bouncing off this week's 28,953 low - made close to its 28,876 August low - but is so far being capped by its August-to-September downtrend line at 29,539. If bettered, last week's high at 29,753 should be back in sight. Additional potential upside targets are the early August high at 29,947 and the August peak at 30,196.

Only a bearish reversal and fall through the recent lows at 28,953-to-28,876 would likely put the April-to-September uptrend line at 28,544 back on the map.

Short-term outlook: bullish while above the 28,876 August low

Medium-term outlook: bullish while above the August low at 28,876

Nasdaq 100 daily candelstick chart

USD/JPY probes key support

USD/JPY is slipping as rate-hike expectations and renewed intervention fears drive a sharp sell-off with the May-to-August lows so far acting as strong support, though. Were it to give way, the long-term uptrend may be threatened as a significant top my be formed with the ¥150.00 region being eyed.

While the May low at ¥155.03 holds on a daily chart closing basis, though, another bounce off this key support may ensue with the 7 August low at ¥156.68 representing the first minor resistance level, followed by the 20 August ¥158.02 low.

Short-term outlook: bearish while below the 3 September high at ¥158.97

Medium-term outlook: neutral while above the 6 may trough at ¥155.03; failure there on a daily chart closing basis would turn our forecast bearish

USD/JPY daily candlestick chart

Brent crude rally slows down

Brent Crude's rally from its late August $87.00 per barrel low has so far taken it to its current September high at $99.77 - an over 3-month high. Were it and the psychological $100 mark to be exceeded, the mid-May low at $101.25 may be reached next.

Good support sits between the $96.19-to-$94.33 mid-June-to-August highs.

Short-term outlook: bullish while above the 1 September low at $92.85

Medium-term outlook: bullish while above the 26 August $87.00 low

Brent crude daily candlestick chart