2023-09-12 01:17:27
Asian stock markets remained steady on Tuesday, while the dollar caught its breath, its recent gains curbed by resistance from central banks in China and Japan and by traders waiting for U.S. inflation data to signal that interest rates may have peaked.
The yen had its best day against the dollar in two months after Bank of Japan Governor Kazuo Ueda said policymakers could have enough economic information by the end of the year to determine that short-term interest rates will need to be increased.
The yuan had its best day in six months after authorities promised to correct one-way moves and Archyde.com reported that the central bank had tightened its controls on dollar purchases.
However, the two currencies remain close to their weakest levels of the year, with the yuan at 7.3022 per dollar in offshore exchanges and the yen at 146.68 per dollar, slightly lower than the peaks reached Monday.
Japanese government bonds remained under pressure on Tuesday, with the yield on Japan’s 10-year bond rising 1 basis point to a new high of 0.71%.
“The result of Mr Uedas’s comments was an intense move higher in Japanese swaps and government bond yields,” said Chris Weston, head of research at broker Pepperstone in Melbourne.
“It’s certainly constructive for yen buyers. (But) I refrain from getting carried away at this point… where stocks are more of a medium-term question – we won’t know the outcome of the Yen wage talks. spring before April 2024”.
MSCI’s broadest index of Asia-Pacific shares outside Japan was flat. Japan’s Nikkei rose 0.3%, with markets awaiting U.S. inflation data and this week’s European Central Bank meeting to set interest rate expectations and mood.
On Wednesday, markets expect US figures to show annualized core inflation falling to 4.3% in August, although the headline figure is seen as rising to 3.6%.
“A lower-than-expected reading could slow the rise in the US dollar, while a higher reading could potentially deter risk-off sentiments as it would reinforce market expectations for further rate hikes, which could fuel the dollar strength,” said Christopher Wong, strategist at OCBC.
Interest rate futures put the chance of another U.S. rate hike by the end of the year at 45%.
Investors’ appetite for risk will also be tested this week when British chip designer Arm Holdings lists in New York with a goal of raising nearly $5 billion.
Overnight, a weakening dollar and an increase in the value of Tesla by Morgan Stanley analysts contributed to the rise in US stock markets. Tesla grew 10%. The S&P 500 rose 0.7%.
In early Asian trading, U.S. futures fell 0.2%.
Elsewhere in currency trading, the Australian dollar was weighed by a further decline in consumer confidence, which has been below the neutral 100 mark since March 2022 – the longest period since a recession in the early 1990s.
The Australian dollar, which rebounded on Monday with gains in the yuan, was down 0.1% at $0.6424. The New Zealand dollar also fell 0.1% to $0.5911.
The euro gained against the dollar overnight, but movements were muted as investors reduced their long euro positions ahead of Thursday’s ECB meeting. Prices imply about a 56% chance that policymakers will maintain rates.
“There is a feeling that the ECB has already completed the cycle,” Maybank analysts said in a note to clients.
“Recent PMI indices suggest that growth prospects could deteriorate and put the euro at risk of a further decline. This situation is all the more amplified by persistent expectations of a further rise in commodity prices. from the Fed.
Yields on 10-year Treasury notes remained steady at 4.2980%.
In commodity markets, Brent crude oil futures were flat at $90.59 per barrel. Gold held steady at $1,921 an ounce, while bitcoin was unfavorable and fell below $25,000 for the first time in three months.
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