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The main contract for the container shipping index (European route) rose rapidly, with an intraday increase of 2.00%, currently trading at 1556.9 points.The yield on Japans 30-year government bonds rose 3.0 basis points to 3.405%.Fulian Holdings (00459.HK): Trading in the companys shares will be temporarily suspended from 1 p.m.On December 3, Innoscience (02577.HK) announced that on December 2, the U.S. International Trade Commission (ITC) issued its ruling on the Section 337 investigation initiated by Infineon against Innoscience. In the two patents involved, the ITC ruled that Innoscience did not infringe on one patent, and that Innosciences circumvention design (a design currently used in its products) did not infringe on the other patent. This ITC ruling further clarifies Innosciences intellectual property status and will remove obstacles to its future global development. The company will continue to respect and protect intellectual property rights and is committed to providing global customers with superior silicon-based gallium nitride power solutions.On December 3rd, William Blair analyst Alexandra Symeonidi stated that golds upward momentum may face challenges as asset allocation shifts back to risk assets if market sentiment improves next year. She noted that while gold futures open interest is above the long-term average, it is well below this years peak, potentially indicating a weakening of optimism in the gold market after the strong start to the year. In a report, the analyst pointed out that investors may increase their gold allocations given sticky inflation during a rate-cutting cycle. Symeonidi also believes that "central bank demand for gold is more structural, given the increasing US fiscal deficit and the low proportion of gold held in foreign exchange reserves by emerging market central banks."

On the back of dismal BOJ Minutes and falling yields ahead of US data, the USD/JPY falls toward 136.00

Alina Haynes

Jul 26, 2022 11:55

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The USD/JPY pair is retesting its intraday low at 136.30 in Tokyo during the first hour of trading on Tuesday. As a result, the yen pair reverses the corrective loss from the previous day in reaction to falling US Treasury rates and conflicting comments from the minutes of the Bank of Japan's (BOJ) Monetary Policy Meeting.

 

According to the minutes of their rate-setting meeting in June, Bank of Japan officials agreed that ultra-low interest rates must be maintained to support a fragile economy and ensure that rising inflation was supported by higher wages. According to the Minute statement, members agreed that the BOJ must support the economy, which is under pressure from rising commodity prices.

 

The fear of a recession has returned in other areas of the world despite US authorities' efforts to lessen it. Ben Harris, Assistant Secretary for Economic Policy, and Neil Mehrotra, Deputy Assistant Secretary for Macroeconomics, two representatives of the US Treasury, recently voiced hope for a stronger US gross domestic product (GDP). While GDP shrank in the first quarter, aggregate income, which includes wages, business earnings, rental and interest income, continued to rise at an annual pace of 1.8 percent. This is known as gross domestic income (GDI).

 

A second quarter GDP decline would not indicate a recession owing to the underlying strength of the labour market, demand, and other indicators of economic health, according to US Treasury Secretary Janet Yellen, who addressed concerns about a US recession earlier in the week.

 

The Dallas Fed Manufacturing Index for July fell to its lowest levels since mid-2020, posting -22.6 compared to -12.5 forecast and -17.7 previously, which is noteworthy given that the Chicago Fed National Activity Index printed -0.19 in June as opposed to the anticipated -0.03 figure.

 

In addition, Bloomberg's investigation shows that the absence of trade between Australia and China is causing the Chinese recession worries that are weighing on the economic slowdown in the major countries to also be driving down the USD/JPY exchange rate. According to Bloomberg, "China's economic slowdown is spreading to important exporting countries in Europe and East Asia through weakened demand for manufactured goods, forcing Germany and South Korea to declare unusual deficits with the second-largest economy."

 

Wall Street ended with a mixed showing, with the DJI30 and S&P 500 seeing relatively modest gains while the Nasdaq saw only small declines. The 10-year US Treasury rates, on the other hand, broke a three-day downward trend and rose by around 1.75 percent, returning to the 2.81 percent level recently. S&P 500 Futures saw a notable intraday loss of 0.37 percent as of publication.

 

The key indication for intraday change for pair traders appears to be the US CB Consumer Confidence for July, formerly 98.7. As the markets get ready for a 0.75 percent interest rate increase, the Federal Open Market Committee (FOMC) meeting on Wednesday will be crucial.


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