Key Highlights

• Houthis strike Saudi Arabian cities in significant expansion of war   
• EU and Canada plan far reaching alliance to strengthen partnership
• Qualcomm, Amazon strikes $4 billion custom chip deal
• JP Morgan expects USD/JPY rallies back to 155 to be sold going forward

Forex

USD hit a two-week low before paring losses and closing with a doji candle. Again, there was much focus on USD/JPY as it tumbled before retracing a lot of its intraday decline. Brent crude hit fresh cycle highs while trade tensions between the US and Canada remained high as the latter sought to impose counter tariffs. The late August lows sit around 98.55/56. We get PPI on Thursday, before CPI to close the week.    

EUR bumped up into the 200-day SMA at 1.1631. The next upside target is just above 1.17 while the recent narrow range has 1.1560.70 as initial support. Resilient eurozone data is trumping geopolitics and higher commodity and energy prices. The late August highs reside around 1.1710/11. The ECB’s guidance, after a rate hike on Thursday, is key.

GBP was unchanged on the day, even as BoE governor Bailey pushed back against the idea of a rate hike being inevitable. Yesterday, Chancellor Healey’s speech was seen as an attempt to reassure markets, ahead of the late October budget. The government appears to be acutely aware of any adverse reaction by bond markets to policy. Simply put, higher yields kill off any available fiscal headroom.  Simply put, is Burnham and Healey “In hock to the bond markets”?

JPY posted another multi-month high during Asian hours, at 152.89, but it didn’t get as far as the year-to-date January low at 152.09. Prices then rebounded hard and were relatively steady over the rest of the day. Prices are oversold and the candle looks bullish with a strong rejection of lower prices. Fast money appears increasingly focused on a combination of a hawkish Bank of Japan and the $2 trillion Government Pension Investment Fund increasing domestic ownership. A Fed rate hike will sure upset the recent plunge, yet markets give that only a 58% chance. We got hot wage data overnight, further cementing a BoJ hike next week.

Stocks

US stocks: The S&P 500 lost 0.58% to close at 7,673. The Nasdaq closed down 0.12% at 29,507. The Dow Jones settled lower by 1.2% at 5`2,791. Gains were driven solely by the Tech sector which rallied 3.4%. Memory chip stocks rallied on reports Intel CPUs are getting a 10% price hike in October. The stock jumped 9%, with Seagate and Ciena both rising more than 6%. Qualcomm climbed 3.2% as it struck an AI chip deal with Amazon, while offering the right to buy about $4 billion in stock. Software stocks got hit with Salesforce, Docusign and Intuit down 4%, as OpenAI’s GPT-6 Astra reignited the software disruption fears.

Asian Stocks: Futures are mostly mixed. APAC stocks traded mixed with the US holiday impacting price action. The ASX 200 was muted with soft consumer sentiment and business confidence surveys not helping. The Nikkei 225 was choppy on yen strength and better than expected earnings figures. The Hang Seng and Shanghai Comp were mixed with Hong Kong pulled lower by lower tech while the mainland digested mixed trade data.

Gold

Gold dipped for a second day, with selling picking up as Treasury yields moved higher.

Chart of the Day – Apple into launch day…

Apple is entering a potentially pivotal new era. John Ternus officially became CEO on September 1, succeeding Tim Cook after 15 years at the helm. His first major product event is expected to feature Apple’s long-awaited move into foldable smartphones, being launched later today. This could spark a fresh upgrade cycle, making product demand and margins key areas to watch.

Reports suggest the device could carry a $2,000+ price tag, putting it firmly at the premium end of the smartphone market. For investors, the appeal is potentially significant: a successful foldable could encourage existing iPhone users to upgrade while lifting Apple’s average selling price. Chart wise, prices printed a record high in late July at $344.54 before dipping to support around the major Fib (38.3%) of this year’s low to high move at $305.91. Last weeks high got to $330.81 before selling off to the 50-day SMA at $315.80.