The Tokyo market will be closed today for Sports Day, and trading activity in the North American markets is also expected to be subdued for Columbus Day. With liquidity drying up at the same time as a lack of catalysts, even small news items are expected to trigger price movements.
At the start of the week, the Tokyo market will be closed, while the North American markets are also expected to see sharply lower trading activity and liquidity, as the U.S. cash Treasury market is scheduled to be closed for Columbus Day. In addition, with the release of the U.S. September CPI due, there are indications that investors may broadly refrain from aggressively building positions.
Alongside the decline in liquidity resulting from these market closures, geopolitical risks could weigh negatively on market sentiment. Reports of Houthi attacks and uncertainty over the effectiveness of the energy ceasefire agreement could rekindle instability in crude oil prices, with NY crude futures trading in the high-$90 range. Gold futures have remained elevated amid safe-haven buying.
Political risks in Europe are also expected to weigh on markets, with advances by the far right and far left in Germany's regional elections cited as a risk factor. The dollar has remained relatively calm but continues to trade at elevated levels, while USD/JPY has stayed in the low ¥158 range. EUR/USD has traded around 1.12, and GBP/USD has consolidated in the low 1.32 range.
Economic indicators scheduled for release in overseas markets include U.S. CPI for September and Mexico's industrial production index for August. Speeches and event appearances are also scheduled for the Bank of England's Deputy Governor Breeden, BoE Monetary Policy Committee member Mann, and Cleveland Fed President Hammack.