Yen Steady as Ueda Sticks to Script at Jackson Hole

The Japanese yen is trading quietly at the start of the week. In the North American session, USD/JPY is trading at 146.60, up 0.11%.

Slow Start to a Busy Week

While this week will bring plenty of key data releases - most notably the US non-farm labour market report on Friday and Eurozone inflation on Thursday - markets have been off to a slow start since the weekend. Stabilisation in Chinese markets on the back of a stamp duty reduction seems to have calmed global risk appetite. That said, global equity indices still look set for the worst calendar-month this year.

Calm Before the Storm?

The week started in a relatively good mood. The S&P 500 posted its first back-to-back gains this month, even though the US 2-year yield advanced to a fresh high since July with the 2 and 5-year treasury auctions hitting the highest yields since before the 2008 crisis. One would think that the Chinese stimulus measures have lifted up the sentiment across global equities, but the CSI 300 closed yesterday just around 1% higher.

USD/JPY Rate Updates the High of the Year

Yesterday, USD/JPY hit 146.74 for the first time since November 2022. The rise in the rate is facilitated by the growing gap in the policies of central banks: while the Bank of Japan has kept the rate below zero since 2016, the Fed has been raising rates since the spring of 2022.

Dollar Braces for Data-Heavy Week

The US dollar was choppy on Tuesday as investors watched on the sidelines ahead of a slew of key US economic releases over the next few days.

Constricted Bitcoin Corridor Signals a Volatility Boom

Bitcoin’s tera hash profit margin has reached historic lows as the price has fallen, and the network’s hash rate has risen as more efficient ASICs went to work. Without a rise in the BTC exchange rate, miners’ operations will soon become unprofitable.

Australian Dollar Edges Up Ahead of Inflation Report

The Reserve Bank of Australia meets on September 5th and is widely expected to hold rates at 4.10% for a second straight month. There are clear signs of the economy cooling, including inflation and wage growth easing and a slight rise in unemployment. The RBA would like to extend the pause in rate hikes, with an eye on lowering rates sometime in 2024.

USD/JPY Breaks Above 147

Just a few days after Bank of Japan Governor Kazuo Ueda’s speech at the Jackson Hole summit, the Japanese government released a potentially significant white paper. To say that the two events were contradictory might be a stretch, but they appeared to present a very different stance towards inflation.

Sunset Market Commentary

Turning to FI and FX markets now. US yields dipped lower in Asian dealings with the front end again outperforming before hitting a bottom early in the European session. The 2-y yield, even though still losing about 2.7 bps, holds north of the symbolic 5% barrier. Other tenors moved higher before paring gains as the US entered.

Euro Dips Below 1.08 But Bounces Back After Soft US Data

The euro fell below the 1.08 line on Tuesday after a weak German consumer confidence report but has recovered in the North American session after soft US data. EUR/USD is currently trading at 1.0840, up 0.20%.