Financial markets in Asia moved today, even though there wasn’t much news. Japanese stocks continued their upward trend, with the Nikkei 225 hitting a new record high. Gold also reached a record of over US$3650. Meanwhile, the USD lost value against major currencies like the EUR, GBP, and AUD, though it held steady against the CAD. In Australia, the NAB August business survey showed mixed results. Business confidence dropped from 8 in July to 4. However, business conditions improved from 5 to 7. The survey reported more jobs, but slower growth in labor and purchase costs, as well as in final product prices.

Japanese Political Developments

In Japan, the Liberal Democratic Party is gearing up for a major leadership vote on October 4 to choose a successor for Prime Minister Shigeru Ishiba, with over 100,000 members expected to participate. In other news, the People’s Bank of China set the USD/CNY central rate at 7.1008, better than the estimated 7.1225. China and Canada are still discussing ways to enhance economic cooperation. Wood prices have decreased, raising worries about the housing market. The NASDAQ index also closed at a record high. Asian stock market updates are as follows: Nikkei 225 rose 0.2%, Hang Seng gained 1.2%, Shanghai Composite edged up 0.03%, while Australia’s S&P/ASX 200 fell 0.5%.

Mixed Signals in the US Market

The U.S. dollar is losing value against most major currencies, but the situation is unclear. On one hand, there’s a poor labor market report, while on the other, many are pushing for the Fed to keep rates stable. This creates opportunities to buy options tied to major currency pairs like EUR/USD before the September FOMC meeting. Gold’s record high above $3,650 highlights a move toward safety, driven by a weak dollar and economic worries. This continues a trend from 2024 when central banks bought over 1,000 metric tons of gold for two years in a row, pushing prices past $2,400 per ounce. Traders should consider buying call options on gold futures but remain cautious of potential price drops. We should favor bullish strategies on Japanese stocks, as the Nikkei’s historic growth continues. The index surpassed its 1989 peak back in 2024. With U.S. tariffs on Japanese goods likely to decrease by September 16, buying Nikkei 225 futures or call options makes sense. The October 4 leadership vote may bring short-term volatility, making longer-dated options more appealing. In the U.S. market, the situation appears perplexing, with the NASDAQ reaching a record high even as job opportunities dwindle. This divide resembles the market trends of 2023, where a few large tech companies accounted for over 75% of the S&P 500’s gains. Traders might explore strategies that take advantage of this disparity, such as going long on tech index futures and buying puts on more cyclical indices sensitive to the overall economy. Create your live VT Markets account and start trading now.

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