The yen reaches a 7-week high amid speculation of Bank of Japan intervention
Fragile Market Sentiment Boosts Demand for Safe Havens
The Japanese yen rose during Asian market trading on Wednesday against a basket of major and minor currencies, extending its gains for the third consecutive day against the US dollar, hitting a seven-week high amid speculation of Bank of Japan intervention in the foreign exchange market.
This rise also comes amid the fragile sentiment prevailing in the markets and increased demand for safe-haven assets, in addition to the accelerated pace of short-covering ahead of the Bank of Japan's meeting next week.
Japanese Yen Exchange Rate Today
The dollar fell against the yen by more than 0.3% to (155.08¥), the lowest since June 5, from the opening price today at (155.57¥), and recorded a high at (155.99¥).
The Japanese yen rose by 0.9% against the US dollar on Tuesday, marking the second consecutive daily gain and the largest daily gain since July 17 amid risk aversion.
Bank of Japan Intervention
Traders said that the yen's movements this week bear the hallmarks of further intervention by the Bank of Japan in the foreign exchange market, pending the release of the central bank's daily operations data to confirm the reality of this intervention.
Daily operations data from the Bank of Japan last week showed that the Bank of Japan spent about 6 trillion yen "35 billion US dollars" on Thursday and Friday, July 11-12, just under three months after the last intervention in the foreign exchange market.
The Bank of Japan intervened at the end of April and early May, spending nearly 9.8 trillion yen (61.55 billion dollars) to support the currency. There will be a report at the end of the month from the Ministry of Finance confirming the amount spent on the new intervention.
Fragile Sentiment
Fragile sentiment dominates most global financial markets due to the chaos of the US presidential elections following Joe Biden's withdrawal from the race and his endorsement of his vice president, Kamala Harris, as the Democratic Party candidate to face Republican candidate Donald Trump.
Additionally, weak economic data continues to pour in from the United States, China, Japan, and Europe, showing that the global economy is struggling significantly during the third quarter of this year.
Short Covering
Amid growing speculation about the Bank of Japan's intervention in the forex market, coupled with the market pricing a 44% chance of a 10 basis point rate hike by the Bank of Japan at last week's meeting, speculators have accelerated their short-covering operations.
Japanese Yen Performance Expectations
BNZ's chief strategist in Wellington, Jamison Wong, said, "The yen has been extremely cheap recently." Wong added, "But with the intervention, many short position holders are taking money off the table ahead of next week's Bank of Japan meeting."
Oil declines as markets assess China's rate cut
Oil prices fell on Monday as markets assess China’s decision on the monetary policy.
The People’s Bank of China voted to cut the reverse repo interest rates for 7 days, the first such decision since August 2023, while also cutting one-year borrowing costs to 3.35% from 3.45% after slow growth data.
Morgan Stanley expects Brent to fall to between $75 and $80 a barrel in 2025, with OPEC+ supplies growing by nearly 2.5 million bpd, which might heavily outstrip demand.
On trading, Brent September futures fell 0.3%, or 23 cents to $82.40 a barrel.
US crude stocks due in August closed down 0.45%, or 35 cents to $79.78 a barrel.
Tech sector leads Wall Street higher
US stock indices rose on Monday as the tech sector rebounded after recent heavy losses, with investors now looking forward to quarterly results.
US President Joe Biden announced last weekend his withdrawal from the presidential race, and his endorsement of his VP Kamala Harris to take the top position.
Now investors await a batch of major corporate results this week, including from Alphabet, Amazon, Tesla, IBM, Ford, Coca-Cola, and others.
On trading, Dow Jones rose 0.3%, or 130 points as of 18:18 GMT to 40,4011, while S&P 500 rose 1%, or 55 points to 5560, as NASDAQ added 1.5%, or 256 points to 17,980.
Bitcoin backs off six-week high as Trump odds of winning dip after Biden's withdrawal
Bitcoin fell on Monday for the first session in four away from six-week highs on active profit-taking, with mounting risk aversion after US President Joe Biden’s withdrawal from the presidential race.
The odds of a Trump win, which would boost the crypto market, declined as current VP Kamala Harris prepares to snag the Democratic Party’s candidacy for the presidency.
Donald Trump is rumored to announce a greater role for cryptocurrencies in the US system with a July 27 speech in Tennessee.
The Price
Bitcoin fell 1.75% today at Bitstamp to $66,975, with a July 12 high at $68,486.
On Sunday, bitcoin rose 1.5%, the third profit in a row.
The world’s most valuable cryptocurrency rallied 12% last week, the largest weekly profit since late February.
Crypto Market Value
The market value of cryptocurrencies fell by over $25 billion to a total of $2.560 trillion as both ethereum and bitcoin declined.
US President Joe Biden officially withdrew from the upcoming Presidential elections amid doubts about his mental acuity and stamina.
He formally endorsed his VP Kamala Harris to take the helm of the Democratic Party and compete against Donald Trump for the top position.
Harris immediately called for more donations and vowed to unify the Democratic party and the nation “to defeat Trump and his extremist ideology”.
Trump’s Odds Waning
The New York Times said that recent polls showed a two percent difference in favor of Donald Trump on a national scale.
It’s a slight improvement from Biden’s 3% national polls deficit.
Bitcoin Conference
Trump will speak ahead of the Bitcoin Conference scheduled for later this month according to organizers, which could shed light on his increasing support of the crypto industry.