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Markets update: The yen whipsawed on Friday after speculation of Japanese intervention following cooler US inflation data, while Asian stocks remained on track for a weekly gain on hopes of a September Fed rate cut.
Economic Calendar
Global Markets Roundup: 12 July 2024
The yen experienced volatility on Friday, oscillating between losses and gains as investors reacted to speculation that Tokyo had intervened to support the Japanese currency following a U.S. inflation report that came in cooler than expected. The yen's movements against the dollar and other major currencies captured market attention, even as Asian stocks appeared set for a weekly gain driven by increasing expectations of a rate cut from the Federal Reserve in September (FEDWATCH).
Speculation persists that Japanese authorities intervened in the currency market on Thursday, when the yen surged nearly 3% against the dollar following the U.S. inflation data release. The dollar finished Thursday's session with a 1.7% loss against the yen, marking its largest daily decline since May. Local media suggested that Tokyo conducted official buying to bolster the yen, which has been languishing at 38-year lows. However, authorities have not confirmed any intervention. The Nikkei reported that the Bank of Japan conducted rate checks with banks on the euro against the yen on Friday, citing multiple sources.
The MSCI's broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) fell 0.3%, following a negative lead from Wall Street, as investors shifted focus to smaller companies after the U.S. inflation report. This shift impacted some Asian markets on Friday, with Japan's Nikkei (NI225) falling more than 2%, primarily due to declines in tech stocks. Conversely, Hong Kong's Hang Seng Index (HSI) rose 2%. Futures for the S&P 500 (ES1!) slipped 0.06%, while Nasdaq futures (NQ1!) declined 0.24%, and EUROSTOXX 50 futures (FESX1!) edged down 0.08%. Despite these fluctuations, Asian shares (.MIAPJ0000PUS) remained on track for a weekly gain of about 1.4%, buoyed by growing expectations of imminent U.S. rate cuts. These expectations were strengthened by Thursday's U.S. consumer price figures and Fed officials' increasing confidence that inflation is under control. Market pricing now indicates over a 90% chance of a Fed easing cycle beginning in September, up from just over 50% a month ago, according to the CME FedWatch tool.
Currency and Commodity Markets
In currency markets, sterling (GBPUSD) stabilized at $1.2912, near a one-year high reached on Thursday, as comments from Bank of England policymakers and better-than-expected GDP data led traders to scale back expectations of an August rate cut in Britain.
The euro gained 0.02% to $1.0868, while the U.S. dollar remained under pressure, languishing near a one-month low against a basket of currencies (DXY). The dollar last stood 0.14% higher at 159.10 yen (USDJPY), after rising over 0.3% to an intraday high of 159.45 yen and dropping 0.7% to a low of 157.75 yen earlier on Friday. Similar choppy trading was seen in other yen pairs, although these fluctuations calmed throughout the day. The euro ended 0.16% higher against the yen (EURJPY), and the pound (GBPJPY) increased by 0.2%, both reversing initial losses.
In commodities and agricultural commodities, oil prices rose, bolstered by signs of strong summer demand and easing inflationary pressures in the United States. Brent futures (BRN1!) ticked up 0.18% to $85.55 per barrel, while U.S. West Texas Intermediate (WTI) crude (CL1!) increased 0.35% to $82.91 per barrel. Gold (GOLD) edged 0.3% lower to $2,407.50 an ounce. Three-month copper on the LME HG1! treaded 0.3% lower to $9,759.50 per metric ton. September London cocoa C2! ​​was trading 5.2% higher, to 7,032 pounds per ton.
Looking ahead today, markets anticipate, German Wholesale Prices, French Inflation Rate, India Industrial Production, US PPI and Core PPI, Michigan Consumer Sentiment Prel, Brazil Business Confidence.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team
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