• Incoming Japanese PM supports monetary easing
• Early Japanese elections could weigh on yen
• Yen about to mark best quarterly performance since 2008

The yen fell in Asian trade on Monday away from two-week highs against the US dollar amid profit-taking and after bearish remarks from incoming Japanese PM Shigero Ishiba. 

Nonetheless, the yen is still heading for its best quarterly performance since 2008 after an effort by the Bank of Japan to normalize monetary policies and raise interest rates.

The Price

The USD/JPY pair rose over 0.6% today to 142.95, with September 20 lows at 142.04.

The yen closed up 1.8% on Friday against the US dollar away from three-week lows at 146.49.

Last week, previous defense minister Shigero Ishiba was chosen as the leader of the governing Liberal Democratic Party in Japan. 

Ishiba

Shigero Ishiba’s leadership win at the Liberal Democratic Party in Japan paves the way for him to become the next Prime Minister.

Ishiba is expected to show new management and leadership at the party and government according to local media.

In recent remarks, Ishiba expressed support for the Bank of Japan’s efforts to achieve economic targets.

After his electoral win, Ishiba said that monetary policies should remain supportive due to current conditions, which stymied the yen’s advance in recent days.

Quarterly Trades

Yen is up a stunning 12% against the US dollar in the third quarter of the year, about to mark the first quarterly profit in three, and the largest since 2008.

It comes after the yen plumbed 38-year lows on July 3 at 161.95 due to the interest rate gap between Japan and the US.

Japanese authorities intervened more than once to boost the local currency and prevent excessive weakness.

Operational data from the BOJ showed it spent nearly 6 trillion yen, or $35 billion, on July 11 and 12 to support the yen, which triggered aggressive unwinding of the yen carry trades.

The BOJ also raised interest rates twice this year so far and announced plans to tighten policies and reduce purchases of government bonds gradually across two years.

Conversely, the Federal Reserve opened the way to ease policies and already started to cut rates aggressively by 50 basis points, reducing the rate gap with Japan to 475 points.

That helped the yen to mark 14-month highs at 139.58 against the dollar in September.

US stock indices rose on Friday on track for weekly gains, with both Dow Jones and S&P 500 marking fresh record highs.

Earlier government data showed US personal spending rose 2.2% in August, slowing down from 2.5% in July.

The Federal Reserve cut interest rates by 50 basis points last week and is likely to cut them by the same amount at the November meeting according to the Fedwatch tool.

US President Joe Biden said the US economy grew by over 10% during his presidential term, with savings and consumer spending all scoring gains.

Biden also pointed to today’s data, which showed inflation has slowed down to 2.2%, which are levels comparable to before the Covid 19 pandemic.

On trading, Dow Jones rose 1% as of 15:38 GMT to 42597, while S&P 500 rose 0.1% to 5752 points. NASDAQ bucked the trend with a 0.2% dip to 18145.

• Oil prices hold their ground above two-week lows
• Report about Saudi Arabia’s commitment to increase output in December

Global oil prices rose in American trade on Friday for the first session in three days, settling above two-week lows amid short-covering.

Despite the gains, oil prices are still heading for weekly losses after a report about Saudi Arabia’s commitment to hike oil production in December.

It stoked concerns about another supply glut in the global market, which overshadowed earlier data about a large US inventory drawdown last week.

Prices

US crude rose over 0.9% today to $68.10 a barrel, with a session-low at $67.09.

Brent rose 1.3% to $72.12 a barrel, with a session-low at $70.89.

On Thursday, US crude tumbled 3.4% to a two-week low at $66.97 a barrel.

Brent fell 3.2% yesterday to September 12 lows at $70.70.

Weekly Trades

Oil prices are down 4.05% so far this week, on track for the first weekly loss in three weeks.

Saudi Output

The Financial Times reported that Saudi Arabia is willing to give up its unofficial price target at $100 a barrel.

According to sources, Saudi officials are preferring to hike oil production in December, even if it led to a prolonged phase of lower oil prices.

Libyan Output

Prices are also pressured by expectations that Libyan crude output will spike in upcoming weeks as warring factions reach a deal to appoint a new central bank governor.

US Stocks 

The Energy Information Administration reported a drop of 4.5 million barrels in US crude stocks last week to a total of 413.0 million barrels, while analysts expected a drop of 1.3 million barrels.

Gasoline stocks fell by 1.5 million barrels to 220.1 million barrels, as distillate stocks fell by 2.2 million barrels to 122.9 million barrels. 

US Production

The EIA reported no change in US crude production last week, remaining at 13.2 million barrels, the lowest since the week ending June 7.

• The white metal about to mark third weekly profit in row 
• US dollar loses ground against main rivals
• Odds of a 0.5% US interest rate cut increase

Silver prices rose in European trade on Friday and approached 12-year highs, and about to mark the third weekly profit in a row as the US dollar lost ground against main rivals. 

Earlier US personal spending data increased the odds of a 0.5% Federal Reserve interest rate cut in November. 

Prices

Silver prices rose 0.7% to $32.23 an ounce, with a session-low at $31.59.

On Thursday, silver rose 0.65%, the second profit in three sessions, and marked 12-year highs at $32.72.

Weekly Trades 

Silver prices are up 3.5% so far this week and about to mark the third weekly profit in a row on strong retail demand. 

Retail Sales 

Retailers are seeking financial assets to guard against ongoing changes in global central banks policies towards more monetary easing, with silver becoming an attractive low-cost option.

Silver remains far from its true value compared to gold, which is trading near record highs.

Gold rallied to a fresh record high on September 22 at $2685 an ounce, while silver is far from its record high scaled in April 2011 at $49.78.

The Dollar

The dollar index fell 0.25% on Friday and extended the losses for another session against a basket of major rivals. 

A weaker dollar makes greenback-denominated metals cheaper to holders of other currencies. 

The decline came after weak US personal spending data in August, which shows the inflationary pressures are indeed slowing down.

According to the Fedwatch tool, the odds of a 0.5% US interest rate cut in November rose from 48% to 53%, while the odds of a 0.25% US rate cut fell to 47%.