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On August 28th, European Central Bank (ECB) Governing Council member Kazzaks stated that the ECB cannot allow consumer prices to continue rising. He said, "We cannot allow inflation to become entrenched. One way to curb the spread of inflation is to raise interest rates. Weve already done that once." The market expects the ECB to raise interest rates at its September meeting. The ECB raised rates in June but held them steady in July. New economic forecasts will be released at that time, providing a basis for interest rate decisions, while the ongoing Middle East wars are prompting the ECB to reconsider raising rates. "Well see what happens next month," Kazzaks said, "but for now, I think the possibility of a rate hike is quite high."On August 28, the Political Bureau of the CPC Central Committee held a meeting to study and deploy emergency rescue and relief work for the mudslide disaster in Gyirong County, Shigatse City, Tibet. Xi Jinping, General Secretary of the CPC Central Committee, presided over the meeting.On August 28th, Henan Jingrun Wanxiang Real Estate Development Co., Ltd. won the bid for Zhengzheng Gaochu [2026] No. 14 (online) for 1.119 billion yuan. The plot is located north of Fengyang Street and west of Xuesong Road in Zhengzhou High-tech Zone, surrounded by Zhengzhou University and Zhengzhou Foreign Language School. The land use right area is 53,799.20 square meters (approximately 80.7 acres), designated for urban residential use, with a starting price of 691 million yuan. Based on this, the transaction price represents a premium of 61.97%. The winning bidder, Henan Jingrun Wanxiang Real Estate Development Co., Ltd., is a subsidiary of China Resources Land Holdings Co., Ltd.British Chancellor of the Exchequer Healy: The top priority is to uphold fiscal discipline, which is the cornerstone of economic stability.The China Earthquake Networks Center officially reported that a 5.1-magnitude earthquake occurred in Longchang City, Neijiang City, Sichuan Province at 13:13 on August 28, with a focal depth of 13 kilometers.

USD/JPY falls to a two-month low at 131.50 owing to decreasing rates and recession concerns

Daniel Rogers

Aug 02, 2022 15:11

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During Tuesday's Asian session, USD/JPY bears hold dominance at the lowest levels in eight weeks as the pair flirts with the 131.50 barrier. Recent weakening in the pair may be linked to negative rates and recent good news on Japan, not to mention inconsistent Fed and China-related rhetoric.

 

US 10-year Treasury rates touched a four-month low of roughly 2.58 percent the day previous, as US economic data heightened concerns of a slump. As traders awaited the announcement of vital US employment numbers for July on Friday, the dollar dropped. In spite of this, the US Dollar Index (DXY) plummeted to a new monthly low before bouncing off 105.25 on Monday.

 

In July, the US ISM Manufacturing PMI fell to its lowest level since January 2020, as the activity index fell from 53.0 to 52.8. However, the actual figures outperformed the market projection of 52.0. Additionally, final readings of the US S&P Manufacturing PMI dipped below early predictions of 52.3 to 52.2, compared to 52.7 earlier. In addition, Germany's Retail Sales plummeted 8.8 percent year-over-year in June, compared to a market forecast of -8.0 percent and a prior decrease of -3.6 percent.

 

It should be remembered that the second straight quarterly contraction in US Gross Domestic Product (GDP) caused a "technical recession" and weighed on the US dollar throughout the preceding week. Fed Chair Jerome Powell's indirect warnings that the hawks are losing momentum were in the same tone.

 

On a separate page, Reuters claims three sources familiar with the issue as claiming that US House of Representatives Speaker Nancy Pelosi was slated to visit Taiwan on Tuesday, despite Chinese vows to never "sit idly by" if she made the trip to the self-governed island claimed by Beijing.

 

At home, speculations of an increase in Japanese salaries and challenges to the Bank of Japan's (BOJ) cheap money policies appeared to have sunk the USD/JPY exchange rate, probably due to widespread inflation anxieties. Recent estimates from Nikkei show that the average minimum wage in Japan will climb by a record 3,3 percent in the fiscal year ending in March 2023. The newspaper also noted, "A Japanese panel is aiming to enhance the average minimum wage by 31 yen."

 

Wall Street concluded with minor losses, but 10-year Treasury rates struck a four-month low of approximately 2.58 percent. In spite of this, as of press time, the S&P 500 Futures indicate moderate losses of around 4,120.

 

In the near future, the words of Chicago Fed President Charles L. Evans and Federal Reserve Bank of St. Louis President James Bullard will impact the course of the USD/JPY.


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