Asian stocks rise ahead of US inflation data. Yen falters

Asian stocks rise ahead of US inflation data.  Yen falters

People walk in front of a screen displaying the Hang Seng stock index in the Central District, in Hong Kong, China on October 25, 2022. REUTERS/Lam Yik/File Photo acquires license rights

SINGAPORE (Reuters) – Asian stocks rose on Tuesday in cautious trading ahead of a key US inflation report that could severely impact the Federal Reserve’s (US central bank) policy outlook, while the fragile yen approached its lowest levels in a year, bringing it back to inflation levels. Intervention area

MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) rose 0.49%, while Tokyo’s Nikkei (.N225) rose 0.36%. In Australia, the S&P/ASX 200 Index (.AXJO) rose 0.61%.

The price of the Japanese yen reached 151.71 yen to the dollar during the Asian hours, after touching its lowest level in a year at 151.92 on Monday. If the struggling currency breaks above last year’s low of 151.94, it will hit a new 33-year low.

Japanese Finance Minister Shunichi Suzuki said on Tuesday that the government will take all possible steps necessary to respond to currency movements, repeating his usual mantra that excessive volatility is undesirable.

The U.S. inflation report, due later in the day, is getting investors’ attention on Tuesday, especially after Federal Reserve Chairman Jerome Powell and policymakers said they still aren’t sure interest rates are high enough to tame inflation.

Economists polled by Reuters expect headline consumer price inflation in the United States to slow to 3.3% in October from 3.7% in September, with the so-called core inflation rate, which excludes volatile components, remaining unchanged.

“This data has a significant impact on the Fed’s future policy direction,” said Anderson Alves, a trader at ActivTrades.

“An error, especially in the less volatile component of core inflation, may lead traders to believe that the Fed may hold back from further hikes. Conversely, any win could lead to a noticeable repricing on the US short-term interest curve.” “

Chinese stocks rose, with the CSI 300 Index (.CSI300) rising 0.40% while Hong Kong’s Hang Seng Index (.HSI) rose 0.57%, ahead of a summit between the top leaders of the world’s two largest economies later this year. week.

10-year Treasury yields rose 2.2 basis points to 4.654%, down slightly from Monday’s one-week peak of 4.696%.

Moody’s lowered its outlook for the United States’ AAA credit rating to “negative” from “stable” on Friday, citing large fiscal deficits and low debt sustainability. Moody’s decision comes after its competitor, Fitch, lowered the top credit rating of the United States in August.

Gary Duggan, CIO of Delma Capital, said that this move underscores the significant structural challenges facing the US economy, which is characterized by unsustainable levels of debt and financial leniency.

“With only one year left until the presidential election, the government is unlikely to announce significant proposals to address these issues, given the unpopularity of promising spending cuts and tax increases,” Dogan said.

The United States faces another partial government shutdown starting Saturday if Congress does not approve a temporary spending bill.

He resumes watching Elaine

The significant decline in the value of the yen has led traders to once again monitor whether the Japanese authorities will intervene or not. The currency has fallen about 14% against the dollar so far this year.

The yen jumped briefly against the dollar in New York hours on Monday after reaching its lowest level since the beginning of the year, which analysts attributed to a wave of trading in options that will mature this week.

Nicholas Shea, a strategist at Standard Chartered Bank, said the yen’s volatility indicates that markets are nervous about the risks of intervention, which also does the job for the authorities to some extent by curbing excessive speculation.

The last time Japan intervened in the currency market by selling the dollar and buying the yen was in October of last year. Intervention data released last month showed that authorities have moved away from taking further such measures since then.

The dollar index, which measures the US currency against six competing currencies, rose 0.057% to 105.69. The index fell 1% in November, on track to end a three-month winning streak.

Oil prices rose slightly after an OPEC report said market fundamentals remained strong. US crude rose 0.26 percent to $78.46 per barrel, and Brent crude stabilized during the day.

Reporting by Ankur Banerjee and editing by Shri Navaratnam

Our Standards: The Thomson Reuters Trust Principles.

Obtaining licensing rightsopens a new tab

You may also like...

Leave a Reply