Asian Markets Cautious as Yen Rises Ahead of Powell Speech
The Japanese yen strengthened early Friday following the release of inflation data that exceeded expectations. Consumer prices in Japan rose 2.8% in July compared to the previous year, surpassing the 2.7% forecasted by economists. Meanwhile, the 10-year Treasury yield remained steady in Asian trading after a five basis point increase on Thursday, and the two-year yield climbed by seven basis points. In contrast, an index tracking dollar strength remained mostly unchanged. Australian and New Zealand bond yields also experienced a rise.
Asian markets opened lower, with equities in Australia, South Korea, and Hong Kong share futures all falling. Japanese equities showed resilience despite the broader downturn. Investors are closely watching for potential remarks from Bank of Japan Governor Kazuo Ueda and Federal Reserve Chair Jerome Powell. US economic indicators presented a mixed picture, with jobless claims data suggesting a gradual cooling of the labor market, while manufacturing activity contracted at the fastest rate this year. Existing-home sales in the US rose for the first time in five months. In commodities, West Texas Intermediate oil prices were flat after a recent gain, and gold prices increased following a prior decline.
US policymakers have been cautious about potential rate cuts, with Jeffrey Schmid of the Federal Reserve Bank of Kansas City and Susan Collins of the Boston Fed advocating for a gradual approach. The Fed is expected to consider easing in September, but no definitive plans have been announced. Wall Street saw declines, with notable movements in individual stocks such as Nvidia Corp., Intel Corp., and Peloton Interactive Inc. As investors await key comments from central bank officials, the broader economic landscape remains complex and uncertain.
