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Japans 20-year government bond yield rose 2 basis points to 2.725%.The Hang Seng Index in Hong Kong opened at 25,969.21 points on October 14 (Tuesday), up 79.73 points, or 0.31%. The Hang Seng Tech Index in Hong Kong opened at 6,180.08 points on October 14 (Tuesday), up 34.57 points, or 0.56%. The CSI 300 Index opened at 9,251.66 points on October 14 (Tuesday), up 29.12 points, or 0.32%. The H-share Index opened at 4,023.81 points on October 14 (Tuesday), down 2.44 points, or 0.06%.On October 14th, Kyodo News reported that the secretaries-general of the Constitutional Democratic Party of Japan (CDP), the Japan Restoration Party (JRJ), and the Democratic Party for the People (DPN) are expected to hold a meeting on the afternoon of the 14th regarding the prime ministerial nomination election to select the successor to Prime Minister Shigeru Ishiba. Separately, the Liberal Democratic Party (LDP) will hold a secretary-general meeting with the DPN that afternoon. DPN leader Yuichiro Tamaki will hold a press conference that morning. Tamaki has expressed his willingness to hold a party leaders meeting with LDP leader Yoshihiko Noda, emphasizing that reaching consensus on security and energy policy is a prerequisite for cooperation in the prime ministerial nomination election. The LDP will hold a meeting with members of both houses of parliament in the afternoon, where party president Sanae Takaichi will explain the reasons behind Komeitos withdrawal from the ruling coalition.On October 14, Country Garden Holdings (02007.HK) announced on the Hong Kong Stock Exchange that it will hold a plan meeting on November 5, where creditors will vote on its offshore debt restructuring plan. If approved at the meeting, the plan will then require court approval and confirmation. The plan confirmation hearing is scheduled for December 4.Hang Seng Index futures opened up 0.3% at 25,887 points, 2 points below the spot price.

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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