On Friday, the yen experienced turbulent trading, oscillating between losses and gains, as market sentiment remained unsettled following speculation of Japanese intervention to stabilize the currency. This uncertainty followed a subdued U.S. inflation report.
The focus of trading centered on movements in the yen against major currencies, overshadowing broader market activity where Asian stocks showed optimism amid increasing expectations of a Federal Reserve rate cut in September.
At the close of trading, the dollar was marginally down by 0.05% at 158.79 yen. Earlier, it had climbed over 0.3% to 159.45 yen before sliding 0.7% to 157.75 yen during the early Asian session.
Similar erratic movements were observed in other yen pairs, with the euro slightly up by 0.02% against the yen and sterling gaining 0.1%, reversing earlier losses.
“The market is on edge this morning, anticipating potential further intervention. Now that the Bank of Japan has intervened, there’s a strong possibility of additional actions,” said Tony Sycamore, market analyst at IG. “Alternatively, the market could simply be highly nervous.”
Reports suggested that Japanese authorities likely intervened on Thursday to curb the yen’s sharp 3% intraday rise against the dollar. Official sources remained silent on the matter, typical of such interventions.
Elsewhere, MSCI’s broadest index of Asia-Pacific shares outside Japan showed little change, set for a 1.6% weekly gain amid rising bets of impending U.S. rate cuts.
Thursday’s U.S. consumer price data strengthened expectations of Fed easing, with market indicators now pointing to a more than 90% likelihood of a rate cut cycle starting in September, up from just over 50% a month earlier.
Despite positive sentiment, Asian stocks failed to rally on Friday, mirroring Wall Street’s cautious stance post-U.S. inflation figures. Japan’s Nikkei dropped 2.3%, led lower by tech stocks.
In currency markets, sterling eased slightly to $1.29095, near a one-year high, as upbeat Bank of England comments and strong GDP data reduced expectations of an August rate cut.
The euro edged up to $1.0871, while the U.S. dollar remained subdued near a one-month low against a basket of currencies.
In commodities, oil prices rose in early Asian trade on Friday due to strong summer demand and easing U.S. inflation pressures. Brent futures increased 0.4% to $85.74 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 0.56% to $83.08 a barrel.
Gold prices dipped slightly by 0.07% to $2,413 an ounce.
