Yen resumes gains under supervision of Japanese authorities
- Japan’s finance minister supports policy normalization
- Odds of additional BOJ rate hikes fade
The yen rose in Asian trade against a basket of major rivals, resuming gains against the dollar after a two-day hiatus and approaching seven-month high once more under strict supervision by Japanese authorities.
Japan’s finance minister has expressed his support for policy normalization, however, a few bearish remarks from Bank of Japan officials hurt the odds of another interest rate hike this year.
The Price
The USD/JPY pair fell 0.85% today to 145.42, with a session-high at 146.87.
The pair closed down 1.65% on Wednesday on aggressive profit-taking after hitting a seven-month high at 141.68 yen per dollar.
Japanese Authorities
Japan’s finance minister Shinuchi Suzuki said on Thursday that authorities continue to monitor the sharp movements in the stock and forex markets closely, adding that the government supports normalization efforts.
Suzuki said the government is also monitoring wages growth, and that agreed upon wage hikes in the spring are reflected now in the data, with the current policies aiming at achieving sustainable growth in wages.
Less Bullish Remarks
Bank of Japan Deputy Governor Shinichi Uchida said the central bank won’t raise interest rates when the markets are unstable.
He said that given the current turmoil, the BOJ will prefer to maintain current levels of monetary easing unchanged.
Japanese Rates
Naturally, following the remarks, the odds of a BOJ interest rate hike for the third time this year tumbled considerably, which would likely reduce the pressure to unwind carry trades.
Ethereum falls by over 5% amid profit-taking
Most cryptocurrencies lost ground today on profit-taking after rebounding yesterday and recouping some losses.
Markets were concerned about a US recession after negative US labor data last week, with some analysts thinking the Fed might have been too late to cut interest rates.
According to the Fedwatch tool, the odds of a 0.5% interest rate cut by the Federal Reserve in September stood at nearly 67%
Most financial markets rebounded strongly on both Tuesday and Wednesday after the bloodbath of the earlier days.
Ethereum
On trading, ethereum fell 5.1% as of $2380.9 as of 18:43 GMT.
Ripple
Ripple fell 2.3% as of 18:43 GMT to $0.5025.
US stock indices extend recovery from recent heavy losses
US stock indices rose on Wednesday, extending its recovery from the massive losses sustained on Friday and Monday.
Markets were concerned about a US recession after negative US labor data last week, with some analysts thinking the Fed might have been too late to cut interest rates.
According to the Fedwatch tool, the odds of a 0.5% interest rate cut by the Federal Reserve in September stood at nearly 67%
On trading, Dow Jones rose 0.7%, or 270 points as of 16:50 GMT to 39,268, while S&P 500 rose 1%, or 50 points to 5290, as NASDAQ added 1%, or 170 points to 16,537.
Gold moves in negative zone after US yields
- Odds of Fed 0.5% rate cut decline
- Markets await more clues about size of US rate cut
Gold prices fell in European trade on Wednesday, moving in a negative zone after trading below $2400 and as US 10-year treasury yields rebounded.
The odds of a 0.5% Fed interest rate cut in September fell away as markets await more clues on the size of the rate cut.
Gold Prices Today
Gold prices fell 0.5% to $2379 an ounce, with a session-low at $2395.
Prices lost 0.85% on Tuesday, the fourth loss in a row as US yields rebounded.
US Yields
US 10-year treasury yields rose 1.1% on Wednesday away from 14-month lows at 3.667%, about to trade once more above 4.00%, and pressuring non-yielding assets.
The developments came as most global stocks rebounded and the yen tumbled after Japanese official remarks about the difficulty of raising interest rates once more this year.
US Rates
The odds of a 0.5% Federal Reserve rate cut in September fell from 75% to 65% according to the Fedwatch tool.
San Francisco Fed President Mary Dale said she’s keeping her mind open on cutting interest rates as needed.
The SPDR
Gold holdings at the SPDR Gold Trust rose by 3.16 tonnes yesterday to a total of 848.06 tonnes, the highest since early February.