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Markets update: Chinese stocks decline, yuan reaches its highest level in 16 months. China keeps rates unchanged unexpectedly. BOJ keeps rates unchanged as anticipated.
Economic Calendar
Global Markets Roundup: 20 September 2024
Asian stocks continued their upward trend on Friday, benefiting from the positive impact of a significant interest rate cut in the U.S. The Japanese yen strengthened as the Bank of Japan maintained stable rates and expressed optimism about the economy. Conversely, European markets are expected to open lower, with EUROSTOXX 50 FESX1! futures down by 0.3% and FTSE Z1! futures falling by 0.5%. Wall Street futures also showed a slight decline following the S&P 500's record high close on Thursday. In China, the central bank opted to keep its key lending rates unchanged, contrary to expectations of a decrease. Chinese stocks 3399300 stood out in the region, with blue-chip stocks down by 0.5%. The Nikkei NI225 index rose by 1.5% and recorded a weekly gain of 3.1%. MSCI's most comprehensive index of Asia-Pacific shares excluding Japan (.MIAPJ0000PUS) climbed by 0.6% to a two-month peak, following the previous day's upsurge on Wall Street. The index was set to achieve a weekly increase of 2.4%.
The Bank of Japan, as anticipated, maintained its short-term rate at 0.25% in a brief announcement on Friday, while upgrading its assessment of consumption. Notably, it acknowledged that the exchange rate could have a greater impact on prices compared to previous periods. The yen has strengthened by 14% since early July, but it has encountered resistance around the key level of 140 per dollar. Currently, it is trading at 142.21 per dollar, up 0.3%, yet down 1% for the week despite the overall weakness of the dollar. Recent data revealed that Japan's core inflation has been rising for the fourth consecutive month, reinforcing the argument for further tightening of monetary policy. Kazutaka Maeda, an economist at Meiji Yasuda Research Institute, stated, "Given the yen's appreciation and the ongoing market volatility, maintaining the current interest rates seems appropriate at this time. The necessity for rate hikes to counteract the weak yen has somewhat diminished. Instead, the BOJ will assess wages and prices and make necessary adjustments to sustain a positive cycle of wages and prices."
Investors are eagerly awaiting any indications from Governor Kazuo Ueda regarding the timing and pace of future rate hikes during the post-meeting press conference at 0630 GMT. Following the Federal Reserve's initial rate cut, Wall Street had the opportunity to digest the news. With further easing expected, investors are optimistic about the continuous growth of the U.S. economy. Positive jobless claims data has reinforced the belief that the labor market remains robust. Market expectations suggest a 40% likelihood of another 50 basis points cut by the Fed in November, with a total of 73 basis points priced in by the end of the year. It is anticipated that rates will reach 2.85% by the conclusion of 2025, which is currently perceived as the Fed's neutral estimate.
Within the foreign exchange markets, the dollar DXY remained close to its lowest point in a year when compared to major currencies. The British pound GBPUSD stood strong at $1.3297, after rising by 0.7% overnight to its highest level since March 2022 following the Bank of England's decision to maintain interest rates. The onshore yuan symbolized by USDCNYÂ reached its strongest level in almost 16 months, prompting state banks to step in and curb its rapid appreciation. After the BOJ announcement the USDJPY was trading at 142.40 per dollar.
Commodities also sustained their weekly increases. GOLD remained close to a record high at $2,592.67 per ounce, while oil prices are poised for their second consecutive week of growth. Brent futures BRN1! declined by 0.3% to $74.67 per barrel, yet they have risen by 4.2% this week. U.S. WTI crude futures CL1!, which dropped by 15 cents, or 0.2%, to $71.80 per barrel, recorded weekly gains of 4.8%. December, arabica coffee KC1! decreased by 2.75 cents, or 1.0%, closing at $2.6165 per lb​​, continuing its decline from a 13-year peak on Monday. Meanwhile, November robusta coffee RC2! dropped by 1.6% to $5,248 per ton. The leading wheat contract on the Chicago Board of Trade (CBOT) ZW1! saw a 0.9% increase, reaching $5.70-3/4 per bushel. At the same time, CBOT corn ZC1! went up by 0.3% to $4.07 per bushel, and soybeans ZS1! rose by 0.2% to $10.15-1/4 per bushel.
General news - Information source from multiple newswires.
The article and the data is for general information use only, not advice!
The Trade Academy Team