US Markets Consolidate into the Weekend – Dow off 0.3%
US stock markets had a more muted day on Friday as investors assessed more tariff updates, strong consumer sentiment data, and more earnings reports in the week ahead. The Dow dropped 0.32%, while the S&P and Nasdaq finished close to flat, down just 0.01% and up 0.05%, respectively. Both the dollar and Treasury yields drifted lower, the DXY down 0.27% to 98.46, the 2-year yield off 3.5 basis points to 3.869%, and the 10-year yield down 3.6 basis points to 4.416%. Oil prices were relatively steady despite more EU sanctions on Russia, Brent closing down 0.36% at $69.28, and WTI down 0.30% to $67.34. Gold traded in a relatively quiet range, ultimately pushing 0.33% higher to $3,349.35 an ounce.
Japanese Markets and the Yen in Focus After Election
Japanese markets are set to remain in focus in the days and weeks to come after elections on the weekend that saw the reigning Liberal Democratic Party lose its majority in the chamber. Japanese markets are closed today for Marine Day, but FX markets are, as always, still open, and the yen opened the Asian session higher against the dollar and on the crosses but swiftly filled the gap to the New York close. There is still a lot of uncertainty on what will happen in the coming days, with Prime Minister Shigeru Ishiba’s position under threat, and traders are expecting to see plenty of volatility in the yen as updates on the new government setup hit the newswires. USDJPY is now trading around 148.50, with resistance levels sitting just above 149.00, and even though we normally see JPY buying on haven moves, this correlation has not always been followed in recent moves. Further depreciation for the yen on more uncertainty could see a continuation of this month’s trend, with breaks of resistance levels likely to lead to moves up to 150.00 and above.
Geopolitics and Data in Focus Today for Traders
Asian markets may well have the busier session for a change today, with most of the big events on the macroeconomic calendar coming in the first trading session. Japanese markets are closed today, but traders are expecting plenty of movement in the yen as the market digests what appears to be an expected loss of majority for the ruling LDP party. We have also seen New Zealand CPI data come out weaker than expected (0.5% q/q vs. exp. 0.6% q/q) this morning that has led to some selling in the Kiwi, and traders are expecting more flows over the course of the day. Later in the session, the focus will move to Chinese markets for the latest Loan Prime Rate data, both the 1-year and 5-year expected to remain steady at 3% and 3.5%, respectively. There is little of note due out in the London and New York sessions; however, traders are expecting to see more moves across financial products, especially if we hear more updates on tariffs and sanctions.
