The Bank of Japan may have sold at least $30 billion on Friday, according to the Financial Times, in an effort to control the yen’s weakening, which has dramatically increased the cost of imports, notably for resources.
Price movement strongly suggested that Japanese officials had intervened, albeit they once more refused to confirm it.
Dollar Absorbs Suspected Yen Intervention, China Data Is Mixed!
A dip in Chinese share markets dashed hopes of a potential halt in U.S. interest rate hikes, but the U.S. dollar survived another alleged Japanese intervention to boost the yen on Monday. Supporting the yen would go against the Bank of Japan’s ultra-accommodative policies.
Increase pressure on the central bank to reduce its influence over the yield curve at its policy meeting this week. Sterling was also fluctuating due to the announcement that Boris Johnson had withdrawn from consideration for the position of British Prime Minister.
Stocks mostly continued to rise after the Federal Reserve discussed when it should slow the rate of hikes and could signal a step back at its November meeting. The rise had started late in New York on Friday.
Although bets on a matching rise in December have decreased, markets are still pricing in a 75 basis point increase for next month. Rates have also decreased from over 5.0% at the beginning of last week to a peak of about 4.87%.
The dollar began the day on a positive note with an early surge to 149.70 yen before abruptly taking a drop that quickly increased to 145.28. However, traders were unfazed and pushed the dollar back to 148.90 in choppy trading.
That increased the likelihood that Rishi Sunak, a market favorite, and former finance minister, would win the election and, at the very least temporarily, reduce the political unpredictability that hung over the pound.
The pound originally rose nearly a cent to $1.1402 in response to the announcement, but it was unable to hold and last traded at $1.1307 as investors anticipated further information on the competition.
Market Effects:
S&P 500 futures ESc1 added 0.1% in Asia and Nasdaq futures NQc1 increased by 0.2%, just on the likelihood of a less aggressive Fed. FTSE futures FFIc1 increased 0.1% and EURO STOXX 50 futures STXEc1 firmed 0.7%.
Nikkei Of Japan
- N225 and South Korea both had 0.6% gains.
- KS11 0.9%, but MSCI broadest index of shares outside of Japan from Asia-Pacific.
- On a 1.1% loss in Chinese stocks, MIAPJ0000PUS.
Blue Chips From China
- The CSI300 fell 1.7% as the yuan continued to weaken and Xi Jinping was elected to a record-breaking third term as president, choosing an elite cabinet full of supporters.
Commodity Market Effects
Gold was traded on the commodity markets at $1,654 per ounce XAU=. Following softer-than-expected statistics on Chinese demand, oil prices gave up early gains. U.S. crude CLc1 dropped 41 cents to $84.64 and Brent LCOc1 declined 42 cents to $93.08 per barrel.
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