September’s strong payroll report has quelled recession fears, with a boost of 254,000 jobs, far exceeding expectations of 150,000. This solid job growth strengthens the outlook for a soft landing for the US economy, easing concerns of an aggressive Federal Reserve rate cut. While some technical factors may warrant future revisions, the report supports the idea that the Fed can take a moderate approach to rate cuts through 2025. Despite lingering inflation, the economy remains robust, giving Fed officials more time to assess future policy moves.
JPY
Japanese Prime Minister Shigeru Ishiba announced plans for an economic relief package to help households facing inflation, aiming to support people until wages outpace rising costs. Ishiba also intends to compile a supplementary budget after the Oct. 27 elections. The package includes subsidies for low-income households and larger grants to local governments. Ishiba faces challenges managing an economy transitioning from stagnation, as inflation reaches 2%. While he supports increasing taxes and raising interest rates, he recently stated that current conditions do not justify another rate hike.
USDJPY (Daily). Following the decline of the USD/JPY, the price rebounds to 148.50 for the second time, corresponding to the 38.2% Fibonacci retracement level. We are looking for a break above 148.50 to Long or a reversal pattern to Short.
OIL
US crude oil posted its largest weekly gain since March 2023, with West Texas Intermediate (WTI) up 9%, driven by fears of an Israeli strike on Iran’s oil facilities after Tehran's missile attack. Although President Biden discouraged targeting oil fields, the geopolitical risk has spiked oil prices. Analysts, including Goldman Sachs' Daan Struyven, warn that price could jump by $10-$20 per barrel if Iranian production is disrupted. However, OPEC's spare capacity may help mitigate supply shortages.
WTIUSD (Daily). The dynamic level of oil remains unchanged after support was converted into resistance, as indicated by the yellow and green zones. We expect prices to retrace towards $71.00.
GOLD
Gold price fell 0.3% on Friday, dropping to $2,653 per ounce after a stronger-than-expected US jobs report boosted the dollar. The report reduced expectations of another big interest rate cut by the Federal Reserve in November. Traders are expecting a 25-basis-point cut. Despite the dip, analysts believe gold’s decline will be shallow due to persistent bullish sentiment. Any geopolitical tensions, such as Iran's stance after an Israeli attack, could push prices back toward record highs.
XAUUSD (H4). Buyers have re-entered the market, forming a double-bottom pattern. However, a trend reversal will only occur if the price successfully breaks through the support level at 2630.
BITCOIN
Bitcoin has faced a demand slump that pushed it into bear market territory, though analysts are optimistic it could reach new highs by the year-end, potentially between $85,000 and $100,000. ETF demand is rebounding, but overall interest in the cryptocurrency remains subdued. Bitcoin, currently around $60,000, is 18% off its March peak. Historically, the fourth quarter of a halving year sees strong gains, with Bitcoin up 9%, 59%, and 171% in the previous cycles. However, supply overhangs and global uncertainties, such as the US election and Middle East tensions, contribute to the volatility.
BTCUSD (Daily). As predicted by many analysts, the 66,000 level has proven to be a dynamic resistance. We expect the price to move towards $51,000.
Fullerton Markets Research Team
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