Japan's July wage data exceeded expectations, triggering speculation about a rate hike by the Central Bank of Japan, while expectations for a rate cut by the Fed continue to dominate market sentiment. U.S. stock futures extended their rise ahead of the release of US Non-farm Payrolls (NFP), while the Bitcoin market faces dual pressure from long-term holders dumping and a surge in the MOVE index. This article deeply analyzes how global macro variables influence the performance of risk assets, providing key trading insights for investors.
Japan's wage data exceeds expectations, increasing the probability of a rate hike by the Bank of Japan
Japan's key economic data has intensified market speculation about the Central Bank of Japan's interest rate hike in the fourth quarter. Average cash earnings in July rose by 4.1% year-on-year, significantly higher than the 3.1% increase in June. Overtime pay surged by 3.3% year-on-year (0.5% in June).
Why is the trend of wage growth important to traders? Higher wages may stimulate consumer spending, driving demand-driven inflation. A higher inflation outlook would support a more hawkish policy stance from the Bank of Japan.
Meanwhile, in July, household spending rose by 1.7% month-on-month, following a sharp decline of 5.2% in June. The trend in consumer spending indicates that wage growth is translating into higher consumption, which is a key factor of concern for the Bank of Japan. Supported by optimistic data, the USD/JPY fell by 0.23% to 148.143.
However, the market's optimism about the Fed's rate cut in September has overshadowed the rising expectations for interest rate hikes from the Bank of Japan. Overnight data from the US labor market showed further cooling, which could pave the way for a rate cut in September. According to the CME FedWatch tool, the probability of a 25 basis point rate cut in September rose from 96.6% on Wednesday, September 3, to 99.3% on Thursday, September 4.
Nikkei 225 leads Asian markets, tariff adjustments act as a catalyst
Despite the strengthening of the yen, the Nikkei 225 rose 0.87% to 42,951 points in early trading on Friday, September 5. The strengthening of the yen may exacerbate the impact of U.S. tariffs on demand, affecting corporate profits and suppressing stock prices.
However, reports about the U.S. plans to lower tariffs on Japanese cars contributed to the early rise. The Japanese automotive industry is crucial for trade conditions. Lowering tariffs may boost demand for Japanese cars and drive up stock prices. According to CN Wire:
"Japan's Chief Trade Negotiator Akizawa: Reducing auto tariffs will take effect within a maximum of two weeks."
Meanwhile, the Hang Seng Index rose by 0.50%, while the CSI 300 and Shanghai Composite Index rose by 0.59% and 0.10%, respectively. The market stabilized after Thursday's dumping, which was triggered by reports that Beijing was considering easing short-selling restrictions.
Despite a rebound in risk appetite, gold still rose slightly by 0.10% to $3,549, driven by expectations of a rate cut in the US.
US stock futures continue to rise ahead of key Non-farm Payrolls report
Outside of the Asian market, U.S. stock futures continue to rise from Thursday's trading session. The Nasdaq 100 E-mini rose by 63 points, the S&P 500 E-mini rose by 8 points, and the Dow Jones E-mini rose by 13 points.
Optimism in early trading boosted US stock futures, as overnight US labor market data drove demand for risk assets.
Later today, the highly anticipated US Non-farm Payrolls (NFP) report is expected to spark speculation about the Fed's policy stance for the fourth quarter.
Outlook: US Non-farm Payrolls (NFP) Report Becomes Market Focus
Later today, the US Non-farm Payrolls (NFP) report may trigger market volatility. Economists predict an increase in the unemployment rate, a slowdown in wage growth, and a moderate rise in non-farm employment.
The deterioration of the labor market may support multiple rate cuts by the Fed, stimulating demand for risk assets. In contrast, better-than-expected data may ease expectations for monetary policy easing in the fourth quarter, dampening market sentiment.
Looking ahead, the August US CPI report (September 11) will be the next key data release. In addition to the data, investors should pay close attention to the speeches of FOMC members to understand their views on the labor market, inflation, and monetary policy.
Key technical levels worth paying attention to
The rise in the early session on Friday strengthened the short-term bullish bias. However, the bullish momentum depends on today's US Non-farm Payrolls (NFP) report. For traders, the following key levels may determine the market direction in the upcoming period.
Dow Jones Index
Resistance levels: August 22 high of 45,841, 46,000, then 46,500.
Support level: 45,000, followed by the 50-day exponential moving average (44,623).
Nasdaq 100
Resistance levels: August 18 high point 23,882, 24,000, then 24,500.
Support level: 50-day Exponential Moving Average (23,147), followed by 23,000.
S&P 500
Resistance levels: August 28 high of 6,523, followed by 6,750.
Support level: 6,400, followed by the 50-day exponential moving average (6,348).
As the US Non-farm Payrolls (NFP) report approaches, traders face a critical period that could determine whether September remains the toughest month for the market.
The surge in the MOVE index poses a new threat to Bitcoin
Meanwhile, the Bitcoin bull market has stalled, with long-term holders' wallets continuing to sell and ETF inflows slowing down. Worse still, another lesser-known but important market variable also seems to be unfavorable to BTC bulls, signaling that new challenges are on the horizon.
The market variable is the MOVE index, created by former Merrill Lynch Managing Director Harley Bassman. This index calculates implied volatility by taking a weighted average of one-month Treasury option prices across multiple maturities (2-year, 5-year, 10-year, and 30-year). This method captures the collective expectations of market participants regarding future interest rate changes.
The MOVE index soared from 77 to 89 within three days, marking the sharpest rise since early April, when President Trump's tariffs shook global markets, including Bitcoin dropping to $75,000.
Moreover, momentum indicators like MACD show a clear bullish reversal, indicating that the index is expected to continue rising. This requires Bitcoin holders to remain cautious, as the rising volatility in the bond market reflected by the MOVE index is known to lead to global liquidity tightening.
U.S. Treasury securities are widely regarded as high-quality liquid assets, forming the cornerstone of the global collateral pool, helping to reduce credit risk for lenders and facilitating the flow of funds in financial markets.
Therefore, an increase in the volatility of government bonds often affects liquidity, raises borrowing costs, and creates a ripple effect in the credit market and the broader financial system. In this case, lenders demand a higher risk premium, market participants withdraw from higher-risk assets, ultimately slowing the flow of funds and putting pressure on global markets.
In addition, increased volatility in government bonds usually prompts bond holders to reduce duration risk by shifting from long-term bonds (such as 10-year or 30-year government bonds) to short-term securities (such as 2-year notes or treasury bills).
This "shift towards high-quality assets" or "shift towards safe assets" is often accompanied by a broader market sell-off, as investors reduce their exposure to stocks, corporate bonds, and other risk assets in the face of volatility in the treasury market to preserve capital.
Therefore, the historical characteristic of Bitcoin price rises is often a downward trend in the MOVE index, and vice versa.
In short, the latest rebound of the MOVE index may exacerbate the pain in the BTC market, potentially deepening the price pullback.
Conclusion: Global macro variables intertwine, risk assets face tests
The current market is at a critical turning point, with the tug-of-war between Japan's wage rise and the Fed's policy expectations determining the short-term direction. The US stock market remains resilient ahead of the US Non-farm Payrolls (NFP), but the Bitcoin market faces structural challenges.
The sharp rise of the MOVE Index deserves significant attention, as history shows a negative correlation between Treasury volatility and Bitcoin prices. Investors should be wary of the potential impact of global liquidity tightening on risk assets.
Traders are advised to closely monitor the results of US Non-farm Payrolls (NFP) and their impact on the Fed's policy path, while also tracking the MOVE index trends to assess systemic risks. In an environment of increasing uncertainty, maintaining flexibility in the investment portfolio and managing risks is particularly important.
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The suppression of US data on Japan's wage growth is favourable information, the MOVE index soaring warns of new risks for Bitcoin.
Japan's July wage data exceeded expectations, triggering speculation about a rate hike by the Central Bank of Japan, while expectations for a rate cut by the Fed continue to dominate market sentiment. U.S. stock futures extended their rise ahead of the release of US Non-farm Payrolls (NFP), while the Bitcoin market faces dual pressure from long-term holders dumping and a surge in the MOVE index. This article deeply analyzes how global macro variables influence the performance of risk assets, providing key trading insights for investors.
Japan's wage data exceeds expectations, increasing the probability of a rate hike by the Bank of Japan
Japan's key economic data has intensified market speculation about the Central Bank of Japan's interest rate hike in the fourth quarter. Average cash earnings in July rose by 4.1% year-on-year, significantly higher than the 3.1% increase in June. Overtime pay surged by 3.3% year-on-year (0.5% in June).
Why is the trend of wage growth important to traders? Higher wages may stimulate consumer spending, driving demand-driven inflation. A higher inflation outlook would support a more hawkish policy stance from the Bank of Japan.
Meanwhile, in July, household spending rose by 1.7% month-on-month, following a sharp decline of 5.2% in June. The trend in consumer spending indicates that wage growth is translating into higher consumption, which is a key factor of concern for the Bank of Japan. Supported by optimistic data, the USD/JPY fell by 0.23% to 148.143.
However, the market's optimism about the Fed's rate cut in September has overshadowed the rising expectations for interest rate hikes from the Bank of Japan. Overnight data from the US labor market showed further cooling, which could pave the way for a rate cut in September. According to the CME FedWatch tool, the probability of a 25 basis point rate cut in September rose from 96.6% on Wednesday, September 3, to 99.3% on Thursday, September 4.
Nikkei 225 leads Asian markets, tariff adjustments act as a catalyst
Despite the strengthening of the yen, the Nikkei 225 rose 0.87% to 42,951 points in early trading on Friday, September 5. The strengthening of the yen may exacerbate the impact of U.S. tariffs on demand, affecting corporate profits and suppressing stock prices.
However, reports about the U.S. plans to lower tariffs on Japanese cars contributed to the early rise. The Japanese automotive industry is crucial for trade conditions. Lowering tariffs may boost demand for Japanese cars and drive up stock prices. According to CN Wire:
"Japan's Chief Trade Negotiator Akizawa: Reducing auto tariffs will take effect within a maximum of two weeks."
Meanwhile, the Hang Seng Index rose by 0.50%, while the CSI 300 and Shanghai Composite Index rose by 0.59% and 0.10%, respectively. The market stabilized after Thursday's dumping, which was triggered by reports that Beijing was considering easing short-selling restrictions.
Despite a rebound in risk appetite, gold still rose slightly by 0.10% to $3,549, driven by expectations of a rate cut in the US.
US stock futures continue to rise ahead of key Non-farm Payrolls report
Outside of the Asian market, U.S. stock futures continue to rise from Thursday's trading session. The Nasdaq 100 E-mini rose by 63 points, the S&P 500 E-mini rose by 8 points, and the Dow Jones E-mini rose by 13 points.
Optimism in early trading boosted US stock futures, as overnight US labor market data drove demand for risk assets.
Later today, the highly anticipated US Non-farm Payrolls (NFP) report is expected to spark speculation about the Fed's policy stance for the fourth quarter.
Outlook: US Non-farm Payrolls (NFP) Report Becomes Market Focus
Later today, the US Non-farm Payrolls (NFP) report may trigger market volatility. Economists predict an increase in the unemployment rate, a slowdown in wage growth, and a moderate rise in non-farm employment.
The deterioration of the labor market may support multiple rate cuts by the Fed, stimulating demand for risk assets. In contrast, better-than-expected data may ease expectations for monetary policy easing in the fourth quarter, dampening market sentiment.
Looking ahead, the August US CPI report (September 11) will be the next key data release. In addition to the data, investors should pay close attention to the speeches of FOMC members to understand their views on the labor market, inflation, and monetary policy.
Key technical levels worth paying attention to
The rise in the early session on Friday strengthened the short-term bullish bias. However, the bullish momentum depends on today's US Non-farm Payrolls (NFP) report. For traders, the following key levels may determine the market direction in the upcoming period.
Dow Jones Index
Resistance levels: August 22 high of 45,841, 46,000, then 46,500.
Support level: 45,000, followed by the 50-day exponential moving average (44,623).
Nasdaq 100
Resistance levels: August 18 high point 23,882, 24,000, then 24,500.
Support level: 50-day Exponential Moving Average (23,147), followed by 23,000.
S&P 500
Resistance levels: August 28 high of 6,523, followed by 6,750.
Support level: 6,400, followed by the 50-day exponential moving average (6,348).
As the US Non-farm Payrolls (NFP) report approaches, traders face a critical period that could determine whether September remains the toughest month for the market.
The surge in the MOVE index poses a new threat to Bitcoin
Meanwhile, the Bitcoin bull market has stalled, with long-term holders' wallets continuing to sell and ETF inflows slowing down. Worse still, another lesser-known but important market variable also seems to be unfavorable to BTC bulls, signaling that new challenges are on the horizon.
The market variable is the MOVE index, created by former Merrill Lynch Managing Director Harley Bassman. This index calculates implied volatility by taking a weighted average of one-month Treasury option prices across multiple maturities (2-year, 5-year, 10-year, and 30-year). This method captures the collective expectations of market participants regarding future interest rate changes.
The MOVE index soared from 77 to 89 within three days, marking the sharpest rise since early April, when President Trump's tariffs shook global markets, including Bitcoin dropping to $75,000.
Moreover, momentum indicators like MACD show a clear bullish reversal, indicating that the index is expected to continue rising. This requires Bitcoin holders to remain cautious, as the rising volatility in the bond market reflected by the MOVE index is known to lead to global liquidity tightening.
U.S. Treasury securities are widely regarded as high-quality liquid assets, forming the cornerstone of the global collateral pool, helping to reduce credit risk for lenders and facilitating the flow of funds in financial markets.
Therefore, an increase in the volatility of government bonds often affects liquidity, raises borrowing costs, and creates a ripple effect in the credit market and the broader financial system. In this case, lenders demand a higher risk premium, market participants withdraw from higher-risk assets, ultimately slowing the flow of funds and putting pressure on global markets.
In addition, increased volatility in government bonds usually prompts bond holders to reduce duration risk by shifting from long-term bonds (such as 10-year or 30-year government bonds) to short-term securities (such as 2-year notes or treasury bills).
This "shift towards high-quality assets" or "shift towards safe assets" is often accompanied by a broader market sell-off, as investors reduce their exposure to stocks, corporate bonds, and other risk assets in the face of volatility in the treasury market to preserve capital.
Therefore, the historical characteristic of Bitcoin price rises is often a downward trend in the MOVE index, and vice versa.
In short, the latest rebound of the MOVE index may exacerbate the pain in the BTC market, potentially deepening the price pullback.
Conclusion: Global macro variables intertwine, risk assets face tests
The current market is at a critical turning point, with the tug-of-war between Japan's wage rise and the Fed's policy expectations determining the short-term direction. The US stock market remains resilient ahead of the US Non-farm Payrolls (NFP), but the Bitcoin market faces structural challenges.
The sharp rise of the MOVE Index deserves significant attention, as history shows a negative correlation between Treasury volatility and Bitcoin prices. Investors should be wary of the potential impact of global liquidity tightening on risk assets.
Traders are advised to closely monitor the results of US Non-farm Payrolls (NFP) and their impact on the Fed's policy path, while also tracking the MOVE index trends to assess systemic risks. In an environment of increasing uncertainty, maintaining flexibility in the investment portfolio and managing risks is particularly important.