This Week's Market Strategy – September 3, 2024 (Tue)

Fed Chair Powell's ultra-dovish speech at Jackson Hole the Friday before last confirmed a September rate cut, but due to a sense of exhaustion from the catalyst, USD/JPY rose throughout the week. This was supported by continued gains in US long-term interest rates and the US dollar index. USD/JPY rose nearly 3 yen last week, from the mid-143 yen range to the early 146 yen range. The momentum continued into the week, pushing USD/JPY above the 147 yen level. The highlight of this week is the employment report. The Fed places great emphasis on the labor market, and Chair Powell stated clearly: "We do not welcome further weakness, and we will do everything we can to keep the labor market strong." Other key data includes today's ISM Manufacturing PMI and Thursday's ISM Services PMI. We expect USD/JPY to continue its uptrend, though there may be further tests of lower levels.

Gold at $2,560 is heavy resistance. Since gold is still expected to test higher levels this year, we recommend waiting for corrections to around $2,450 for long positions. From a medium to long-term perspective, gold may decline next year.

WTI crude oil: Iran's attacks on Israel will likely subside for now. Iran appears to be cautious given the precision of the assassination of Hamas leader Haniyeh. Additionally, OPEC+ will begin increasing production by 180,000 b/d out of their 2.2 million b/d voluntary production cut starting next month. Crude has fallen to $73.

In summary: USD/JPY – search for buying opportunities in the short term, take profits and short around 151–153 yen. Gold – buy at $2,450. For short-term positions, stop loss if below $2,300, but for the rest of the year, hold medium to long-term positions firmly. Crude oil – long recommended in the $72 range. For short-term positions, stop loss if below $67.70.