The yen strengthened against the dollar, sterling and euro, with markets leaning towards haven positioning as questions grew over the durability of AI-linked trades. Carry-trade dynamics persisted, while Japan’s September CPI moved beyond the BoJ’s 2% y/y target, a backdrop that could reinforce expectations of a more hawkish stance. In US equities, risk appetite faded and tech led declines on concerns about AI spending and financing needs in a high-rate setting: Meta Platforms slid about 7% and Advanced Micro Devices fell more than 8%, while Micron Technology dropped 6% and Nvidia 4%.
Commodities and Market Outlook
Oil prices edged higher as supply risks intensified after Houthi attacks on Saudi Arabia, raising concern over the reliability of exports if regional tensions persist. Gold showed bearish tendencies, with firmer oil feeding inflation expectations and, by extension, a tighter Fed outlook, even as US bond yields fell. Data diary items include Canada’s August retail sales plus October preliminary US S&P Global PMI and UoM sentiment, followed on Monday by Germany’s October Ifo indicators and the UK’s October CBI Distributive Trades. Technically, USD/JPY broke 157.50 to turn it into resistance, with 155.00 in view, while the Nasdaq rejected 29675 and faces 28200; resistance levels sit at 160.50 for USD/JPY and 30770 for the index.
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