US Markets Mixed into Weekend – Dow Drops 0.6%
Markets closed out the week on a lively note on Friday, with US equities finishing mixed while volatility continued to build across currencies and commodities. The Dow Jones fell 0.58% to 49,098, while the S&P 500 was little changed, edging 0.03% higher to 6,915. The Nasdaq outperformed, rising 0.28% to 23,501. US Treasury yields eased as traders positioned ahead of this week’s Federal Reserve meeting. The 2-year yield slipped 1.2 basis points to 3.594%, while the 10-year fell 2.0 basis points to 4.225%. The dollar took a big hit later in the day, the DXY index sliding 0.90% to 97.46, led by sharp losses against the Japanese yen amid renewed speculation of official intervention following volatile late-session moves. Oil prices surged as geopolitical risks intensified, with Brent jumping 2.84% to $65.88 and WTI climbing 2.88% to $61.07, after the US increased pressure on Iran, reviving supply-side concerns. Precious metals extended their relentless rally, with gold rising 1.04% to a fresh record close at $4,987.49, while silver powered decisively through the key $100/oz level, underscoring strong momentum and continued demand for hard assets.
Yen in Focus for FX Markets Today
Intervention talk in the yen hit the market hard on the final trading session of the week on Friday, and traders are still assessing whether the Ministry of Finance did enter the market, or whether talk and rate checking has seen the major pair drop over 3% from Friday’s high to this morning’s low. Talk in the market that the Federal Reserve Bank of New York was checking rates—a normal precursor to intervention—during the session supports the strength of the move, and whether they actually hit the “sell button” in USDJPY or the warning to the market was enough to see long positions exit swiftly is still in debate. More talk over the weekend from Japanese officials about yen weakness saw USDJPY open nearly 60 pips lower than Friday’s close, and the pair looks likely to remain under pressure in the sessions ahead. However, the market does love to test central bank resolve in these conditions, so expect plenty of volatility as we progress through the week.
Another Busy Start to the Week for Traders
Looking ahead, traders are bracing for a volatile start to the new week during the Asian session following Friday’s sharp moves in USD/JPY. While today’s economic calendar is relatively light, heightened sensitivity to currency volatility and central bank expectations is expected to keep markets active across all three trading sessions. There is little on the calendar in the Asian session today, however, we have already seen gapping on the open in currencies with the dollar dropping against most of the majors, especially the yen. Australian markets are on holiday, and the lower liquidity is contributing to the move. There will be a strong focus on German markets in the London session today, with the German IFO Business Climate data (exp 88.3) due out alongside scheduled speeches from Buba President Joachim Nagel. The New York session sees the release of the latest US Durable Goods (exp +3.1% m/m) and Core Durable Goods (exp +0.3%), which could see some reaction in the market. However, again, traders are expecting any updates on the newswires to dominate sentiment.
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