USD/JPY breaks Friday high; Nikkei pares losses ahead of ISM
As of 2026-07-06 12:00 SGT
Key points
- USD/JPY cleared Friday's high at 161.49 and rose to 161.83, its weakest yen print in nearly four decades, as Goldman Sachs revised its one-year target to 165 from 155, citing wide rate differentials and sluggish BOJ normalisation
- Nikkei 225 recovered from its morning close of 68,919 (down 824 points) to 69,031 intraday, but remains down roughly 1% as AI and semiconductor names — hit by Nvidia's Kyber NVL144 delay to 2028 — keep the index under pressure
- Gold futures topped Friday's high ($4,100) to trade at $4,175.60, +1.21%, supported by the soft June payrolls miss of 57,000 (well below forecasts) reducing urgency for a July Fed hike; Goldman Sachs maintained its $4,900 end-2026 target
- OPEC+ approved an 188,000 bbl/day output hike from August as Hormuz Strait flows normalise, capping WTI crude at $68.43, down 0.38% from Friday's close
- ISM services PMI (forecast 54.2) at 22:00 SGT tonight and FOMC minutes on 9 July are the week's key macro catalysts for setting Fed hike expectations
Market snapshot
| Instrument | Level | Change |
|---|---|---|
| USD/JPY | 161.83 | +0.30% |
| EUR/USD | 1.1435 | -0.04% |
| Nikkei 225 (intraday) | 69,031 | -1.02% |
| Hang Seng (intraday) | 23,528 | +0.76% |
| Dow futures | 53,165 | -0.03% |
| S&P 500 futures | 7,542.00 | +0.18% |
| Nasdaq 100 futures | 29,740 | +0.62% |
| Gold futures | 4,175.60 | +1.21% |
| WTI crude | 68.43 | -0.38% |
| Bitcoin | 63,239 | -0.55% |
| US 10-yr yield | 4.485% | +0.0bp |
Foreign exchange — USD/JPY above Friday's high, Goldman lifts target to 165
USD/JPY rose to 161.83 during the Tokyo afternoon session, clearing Friday's high of 161.49 to reach levels last seen in the late-1980s yen slump. Goldman Sachs revised its forecast to 165 for a 12-month horizon, with interim targets of 162 in three months and 163 in six months, driven by widening US–Japan rate differentials, Japan's fiscal pressures and the slow pace of BOJ tightening. Japan's 20-year JGB yield reached 3.785%, its highest since 1996, reflecting both global supply concerns and domestic fiscal worries. The Japanese Finance Ministry has reiterated readiness to respond to excessive yen moves, keeping intervention risk alive as a ceiling on USD/JPY. EUR/USD held subdued at 1.1435 with minimal net movement. Through the rest of the Asian session and into the European open, USD/JPY is likely to consolidate around 161.80 – 162.00, with tonight's ISM print at 22:00 SGT the next potential trigger for directional conviction.
Equities — Nikkei steadies in afternoon, Hang Seng outperforms on tech inflows
Nikkei 225 opened the week with a 600-point gain, briefly pushed TOPIX to an intraday record, then reversed sharply as the SemiAnalysis report on Nvidia's Kyber rack-scale AI architecture delay to 2028 hit AI hardware names across Asia. The morning session closed at 68,919 (down 824 points from Friday), and the afternoon has seen partial recovery to 69,031 (–1.02% intraday). Korean Kospi gyrated between a 3% gain and a 3% loss before settling down around 2–3%, underscoring the fragility of the AI chip rally after last week's strong run. Hang Seng outperformed at 23,528, +0.76% intraday, driven by over HKD 10 billion in southbound buying, with Tencent up more than 4% and Alibaba up more than 2%. US equity futures are modestly firmer — S&P 500 futures +0.18%, Nasdaq 100 futures +0.62% — providing a constructive backdrop for the European session. For the rest of Asian trading, the key focus is whether Nikkei can sustain the 69,000 area; any renewed selling in chip names driven by further AI supply-chain headlines would put the 68,919 morning-close level back in play.
Macro — June NFP miss shifts focus to FOMC minutes; Japan yields at multi-decade highs
US June nonfarm payrolls came in at 57,000, sharply below expectations, reducing the case for a July Fed hike and prompting J.P. Morgan to unwind dollar longs held since mid-June. Fed Chair Warsh declined to offer forward guidance at the Sintra ECB forum, reinforcing the data-dependent stance. The 9 July FOMC minutes (02:00 SGT release) will reveal the degree of internal division over the pace of further tightening. Japan's 10-year yield reached 2.790%, the highest since 1997, while the 20-year yield touched a post-1996 peak of 3.785% — reflecting concerns about fiscal sustainability alongside the BOJ's gradual exit. The FOMC minutes remain the week's most consequential macro event; a hawkish tone would reinforce Goldman's 165-yen call, while a more divided discussion could briefly cap USD/JPY.
Commodities — Gold clears Friday's range; oil softens on OPEC+ supply increase
Gold futures at $4,175.60 are trading well above Friday's high of $4,100.00, supported by the NFP miss reducing rate-hike urgency and by lingering geopolitical risk around the Hormuz Strait and the Khamenei succession. Goldman Sachs maintained its $4,900 end-2026 target. WTI crude at $68.43, down $0.26 from Friday's close, reversed an early recovery after OPEC+'s decision to raise August output targets by 188,000 bbl/day, as Hormuz shipping normalises and oil inventories begin to refill. Into the NY session, gold's ability to sustain above $4,175 and WTI's reaction to any new Hormuz or OPEC commentary will be key price-action tests.
Geopolitics — Khamenei state funeral draws millions; Hormuz normalises as tensions persist
Iran held the first day of Ayatollah Khamenei's state funeral in Tehran on 6 July, with millions in attendance and a six-day ceremony sequence running through 9 July. Khamenei's son and reported successor Mojtaba did not appear at the ceremony, according to media reports. Japan formally revised its legal position to classify the Hormuz Strait as an "international strait." OPEC+'s output increase reflects growing confidence that Hormuz disruptions are easing, though Iran has confirmed transit fees on shipping. Russia launched ballistic missiles at Kyiv, killing at least seven, ahead of the NATO summit in Turkey (7–8 July), where Japan's FM Motegi will attend in place of PM Takaichi. Any new development around Khamenei's succession or Hormuz fees could trigger short-term safe-haven demand for gold.
Upcoming events
| Time (SGT) | Region | Event | Impact |
|---|---|---|---|
| 07/06 22:00 | US | ISM Services PMI (forecast 54.2) | High |
| 07/07 18:30 | UK | BOE Gov Bailey Speaks | Medium |
| 07/08 10:00 | NZ | Official Cash Rate (forecast 2.50%) | High |
| 07/08 10:00 | NZ | RBNZ Rate Statement | High |
| 07/08 11:00 | NZ | RBNZ Press Conference | High |
| 07/09 02:00 | US | FOMC Meeting Minutes | High |
| 07/10 20:30 | CA | Employment Change (forecast 10.0K) | High |
| 07/10 20:30 | CA | Unemployment Rate (forecast 6.6%) | High |