And toward the five-year cycle

Last weekend the Dow Jones Industrial Average fell nearly 400 points, and the Nikkei average has fallen about 300 points so far this week. Normally, in a risk-off scenario, the USD/JPY pair might be expected to move higher yen strength, but it remains around 102.50, unchanged from Friday’s close. The market seems to be unsure whether it is risk-off yen strength or USD strength from higher U.S. interest rates. As the FOMC meeting approaches next week, the possibility of rate hikes is making the near-term market movements more complex. In particular, attention is focused on the speech by Fed Governor Lael Brainard on the 12th, which was decided abruptly. There is a market interpretation that the Fed may be aiming to induce hawkish comments from Brainard to curb a hawkish tilt in market sentiment. The governor has previously remarked with a patient stance on rate hikes just before the March and June FOMC meetings. She is also known to be one of the closest figures to Yellen. If she makes hawkish comments, a September rate hike could become realistic, and the USD/JPY could rise sharply. On the other hand, if the Dow continues to decline at the start of the week, a postponement of the September rate hike could become plausible, potentially leading to a decline in the dollar. Mercury is in retrograde, and during this period markets tend to react more sensitively to statements from important figures. However, after Mercury retrograde ends, it is often the case that such statements are withdrawn. Mercury goes direct on September 22, and the U.S.-Japan financial policies announced around that time should not be ignored. It’s necessary to stay vigilant for any surprises.
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Information source:Kabuki Takashi’s “Market Cycles and Pattern Analysis”