Japan’s retail trade in August dropped by 1.1% compared to last year, falling short of expectations for a 1% increase. This decline points to difficulties in the Japanese economy and affects what markets anticipate. Gold is nearing record levels at $3,850, having risen 12% this month as investors seek safety amid fears of a potential US government shutdown. Demand for gold continues to climb as the third quarter of 2025 comes to a close.

The USD JPY Situation

The USD/JPY rate is holding steady above 148.50, pausing its retracement. The latest Bank of Japan Summary of Opinions adds to the uncertainty about interest rate hikes, which is affecting the stability of this currency pair. Bitcoin remains steady above $114,000, despite having dipped to $109,000 earlier. Expectations for October and upcoming US Non-Farm Payroll data are shaping investor mood. The AUD/USD pair has bounced back to 0.6600, buoyed by the Reserve Bank of Australia’s interest rate decision at 3.6%. Traders are looking forward to Governor Bullock’s press conference. Jerome Powell described the Federal Reserve’s situation as difficult, emphasizing a careful approach. The Fed Sentiment Index is still in a dovish zone after his recent remarks.

Top Brokers Highlight

A list of top brokers for trading EUR/USD in 2025 showcases those offering competitive spreads, quick executions, and strong trading platforms. This resource aims to help traders navigate the Forex market. Japan’s retail sales for August were unexpectedly low at -1.1%, a stark contrast to the anticipated 1% growth. This decline indicates weakening consumer spending, making it harder for the Bank of Japan to raise interest rates. It signals that the Japanese Yen is likely to remain under pressure. Given this weak data, traders might consider positions that benefit from a declining yen, like buying call options on the USD/JPY pair. Past trends from late 2023 and early 2024 show that disappointing economic data kept the Bank of Japan from acting, leading to yen depreciation. With the pair currently holding at 148.50, upward movement seems more likely. The potential for a US government shutdown is triggering a flight to safety in global markets. This surge in gold is the result, marking its best month in over a decade as investors seek refuge from expected volatility. Historically, such shutdowns, like the extended one in late 2018, have led to significant equity market drops and increased interest in safe-haven assets. Gold has risen over 12% this month, supported by strong underlying demand. The World Gold Council’s Q2 2025 data shows that central banks are buying, adding 180 tonnes to global reserves. This institutional interest establishes a solid price base, indicating that any price dips in gold may be good buying opportunities as it approaches all-time highs. Meanwhile, Fed Chair Powell’s recent comments hint at a more cautious and balanced Federal Reserve. This dovish tone may limit the dollar’s strength, providing additional support for dollar-denominated assets like gold and Bitcoin. We expect that the dollar’s gains might peak for the year soon. Attention will be on this Friday’s US Non-Farm Payrolls report, which will be crucial for the markets. A weak jobs report could reinforce the Fed’s cautious approach and accelerate interest in gold. We should brace for significant market fluctuations around this announcement, using derivatives to manage risk or to take strategic positions on the outcome. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now