Asian Currencies in Focus as Japan Warns on Yen: Markets Wrap – Yahoo Finance

(Bloomberg) — An index of Asian currencies fell for a third straight session to kick off a week that includes inflation data that may offer insight into the outlook for global interest rates, while the yen steadied after Japan’s top currency policymaker doubled down on intervention.

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Regional indexes also fell, with shares in South Korea, Hong Kong and mainland China all falling while Japanese shares were unchanged. U.S. stock futures also weakened after the S&P 500 fell on Friday amid a flood of options expirations. The 10-year Treasury yield was steady in Asian markets.

The moves come as markets are in a critical phase of positioning for the second half of 2024 amid an uncertain outlook for central bank policy rates from New Zealand to Japan to the U.S. Inflation rates in Australia and Tokyo, as well as the Federal Reserve’s preferred consumer price index, could help after data showed U.S. services activity recovered at its fastest pace in more than two years.

The Bloomberg Asian Dollar Index fell and the Japanese yen fell below 160 to the dollar. Masato Kanda said authorities were ready to intervene around the clock to support the currency if necessary.Traders are wary of an escalation in official rhetoric following the yen’s 1.6% fall this month, but retail investors appear to be re-betting on a rebound.

“We think the next intervention is likely to come after the yen rises above its late-April high of $160.20 and triggers buying orders,” said Tony Sycamore, market analyst at IG Australia in Sydney.

China’s yuan was little changed at 7.1201 to the dollar on Monday, after the country’s assets sold off again last week as policymakers showed no urgency in rolling out more stimulus measures.

The yuan’s fall is a sign of worsening sentiment toward the world’s second-largest economy, and bond markets are also rallying as investors seek safe havens. Benchmark yields have fallen to record lows amid mixed economic data and rising hopes for more stimulus.

Meanwhile, China and the European Union have agreed to begin talks on a plan to impose tariffs on electric vehicles imported from China.

While traders will analyze inflation data this week, they will also be keeping an eye on rising political risks, with the first debates between the British prime minister and the US president scheduled and the first round of French parliamentary elections due to take place this weekend.

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“If Trump continues to lead, we expect the election to emerge as a big market driver at some point in the coming months,” said Sarah Bianchi, analyst at Evercore ISI.

Triple Witching

The S&P 500 fell on Friday as an estimated $5.5 trillion in options expired in an ominous quarterly event known as the “triple witching.” Nvidia Inc. played a part, with the value of contracts tied to the chipmaker being the second-largest among the underlying assets after the S&P 500.

As bond and currency markets fluctuate with changing views on central bank interest rate cuts and European election uncertainty, traders and strategists are beginning to question how long this year’s rally can last. Global stock indexes are on track to rise 2.3% this quarter, their third consecutive quarterly gain, while U.S. stocks have surged to new highs this month amid the AI ​​boom.

A correction has already begun in the stock market, with some stocks barely losing steam due to the narrow market breadth, according to Morgan Stanley, but that could continue into the second half of the year unless there’s a change in the macroeconomic outlook, such as inflation signaling a need for rate hikes or growth slowing significantly, Michael Wilson, chief U.S. equity strategist, said in a client note on Sunday.

In commodity markets, crude oil prices extended the previous day’s losses and fell to $80 a barrel on a strengthening dollar and technical indicators suggesting the recent rally may be overdone. Gold prices were stable after the Fed reassessed its outlook for rate cuts.

Major events this week:

• Bank of Japan releases summary of June policy meeting on Monday

• Singapore CPI, Monday

• Taiwan unemployment rate, industrial production on Monday

• Argentina unemployment rate, GDP on Monday

• Bank of Canada Governor Tiff Macklem speaks Monday

• San Francisco Federal Reserve President Mary Daly to speak Monday

• Fed Governor Christopher Waller to speak Monday

• Australian consumer confidence on Tuesday

• Malaysia CPI, Tuesday

• Canadian CPI, Tuesday

• Spanish GDP on Tuesday

• U.S. Conference Board Consumer Sentiment Index, Tuesday

• Fed President Lisa Cook and Michelle Bowman to speak Tuesday

• Australian Consumer Price Index, Wednesday

• British Chancellor Rishi Sunak and Labour leader Keir Starmer will debate on Wednesday

• The Bank of Finland’s third international monetary policy meeting begins on Wednesday

• RBA Deputy Governor Andrew Hauser speaks on Thursday

• Japan retail sales, Thursday

• Philippines interest rate decision Thursday

• China industrial profits Thursday

• Eurozone economic confidence, consumer confidence on Thursday

• BOE to release financial stability report on Thursday

• Swedish interest rate decision on Thursday

• Turkey interest rate decision Thursday

• U.S. durable goods, jobless claims, GDP, wholesale inventories on Thursday

• Mexico unemployment, trade, interest rate decisions Thursday

• Japan Tokyo Consumer Price Index, unemployment rate, industrial production, Friday

• UK GDP on Friday

• French Consumer Price Index, Friday

• Italian Consumer Price Index, Friday

• Spanish Consumer Price Index, Friday

• Czech Republic GDP on Friday

• US PCE Inflation, Spending and Income, University of Michigan Consumer Confidence, Friday

• Richmond Fed President Thomas Barkin to speak Friday

• Brazil’s unemployment rate on Friday

• Chile’s industrial production, unemployment on Friday

• Colombia unemployment rate, interest rate decision on Friday

Some of the key market developments:

stock

• S&P 500 futures were down 0.2% as of 10:40 a.m. Tokyo time.

• Nikkei 225 futures (OSE) were almost unchanged

• Japan’s TOPIX rises 0.2%

• Australia’s S&P/ASX 200 fell 0.6%

• Hong Kong’s Hang Seng Index fell 0.6%

• The Shanghai Composite Index fell 0.4%

• Euro Stoxx 50 futures fell 0.3%

currency

• The Bloomberg Dollar Spot Index was little changed.

• The euro was little changed at $1.0689

• The Japanese yen was almost unchanged at 159.68 yen to the dollar.

• The offshore yuan was little changed at 7.2887 per dollar.

• The Australian dollar fell 0.1% to $0.6633.

Cryptocurrency

• Bitcoin fell 0.8% to $63,205.34.

• Ether fell 0.4% to $3,420.35.

Bonds

• The yield on the 10-year Treasury note fell 1 basis point to 4.25%.

• Japan’s 10-year government bond yield rose 2 basis points to 0.990%.

• Australia’s 10-year government bond yield fell 1 basis point to 4.20%.

merchandise

• West Texas Intermediate crude fell 0.3% to $80.46 a barrel.

• Spot gold rose 0.1% to $2,324.68 an ounce.

This story was produced with assistance from Bloomberg Automation.

–With cooperation from Aya Wagatsuma

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