The Japanese yen is rising

The Japanese yen rose, with the highest increase of 0.7% against the US dollar, reaching 145.62. At the same time, government bond futures fell. Bank of Japan Governor Kazuo Ueda responded to lawmakers by stating that if inflation and economic data continue to meet expectations, the central bank's policy stance will not change. This statement was made after the global stock market experienced a significant sell-off following the central bank's interest rate hike in July.

Bank of Japan Policy

Ueda's remarks put an end to market speculation that the Bank of Japan may abandon further interest rate hikes due to market turbulence.

Charu Chanana, head of currency strategy at Saxo Markets, said, "Maintaining the possibility of further interest rate hikes is beneficial for the yen, but to some extent unfavorable for the stock market

Market reaction

Japan's inflation data exceeded expectations. Consumer prices rose by 2.8% year-on-year in July, unchanged from the previous month and higher than economists' expectations of 2.7%. The rise of the Chinese stock market has helped regional stock indices reverse their previous declines.

Expert opinions

Charu Chanana, Head of Monetary Strategy at Saxo Markets: Ueda's remarks are more hawkish than market expectations. Although Ueda only repeated the guidance from the July meeting that the Bank of Japan has not yet ended raising interest rates, maintaining the possibility of further rate hikes is beneficial for the yen.

economic data 

The stock markets in Hong Kong, Australia, and South Korea fell, reflecting the sell-off in the US stock market on Thursday, with both the S&P 500 and the tech focused Nasdaq 100 index experiencing declines. Shareholders of the Chinese company Alibaba Group have approved upgrading its Hong Kong listing to a major position, which is expected to attract billions of dollars of investment from Chinese Mainland.

At the same time, the stock prices of Chinese companies such as NetEase, Baidu, and Bilibili fell as these tech companies released weak financial reports. The yield of the 10-year US treasury bond bond fell by one basis point to 3.84%, while the policy sensitive two-year yield fell by two basis points to 3.98%.

commodity market

Crude oil faces challenging demand prospects and declining product prices after hitting its lowest closing price since January in the middle of the week. The United States' efforts to secure a ceasefire in Gaza have also had an impact on the market.

Main market trends

Stocks:

S&P 500 futures up 0.3%

Japan's Topix rises 0.2%

Australia's S&P/ASX 200 fell 0.2%

Hong Kong Hang Seng Index fell 0.4%

The Shanghai Composite Index rose by 0.3%

Euro Stoxx 50 futures fell 0.2%

Currency:

Bloomberg US Dollar Strength Index fell 0.2%

The euro rose 0.1% to $1.1125

The Japanese yen rose 0.5% to $145.62

Offshore RMB rises 0.1% to $7.1369

Bonds:

The yield of 10-year treasury bond bonds fell by one basis point to 3.84%

Australia's 10-year yield rises four basis points to 3.92%

Product:

West Texas Intermediate crude oil has hardly changed

Spot gold rose 0.3% to $2492.35 per ounce

Editor's Summary

The Japanese yen rose as Bank of Japan Governor Kazuo Ueda hinted at the possibility of further interest rate hikes, while Asian stocks also reversed their previous decline due to the rebound in the Chinese market. Investors will pay attention to the upcoming speech by Federal Reserve Chairman Powell at Jackson Hole to obtain more clues about market trends.

Noun Explanation

Japanese Yen: The official currency of Japan, usually represented in JPY, and is one of the world's major trading currencies.

Government bond futures: a financial contract used to trade the price of government bonds at a future point in time, typically used to hedge risk or speculation.

Jackson Hole Conference: The annual economic policy conference held by Federal Reserve Chairman Powell in Jackson Hole, Wyoming, attracts attention from global financial markets.

This year's major events

1. March and July 2024: Bank of Japan raises interest rates, attracting market attention.

2. August 2024: Kazuo Ueda hinted in his speech in parliament that interest rates may continue to rise in the future, driving the appreciation of the yen.

On August 28, 2024, Alibaba Group's shareholders approved the upgrade of its Hong Kong listing to a major position, which is expected to attract a large amount of investment.