Economy

Stocksak also shows a rise in the yen


© Stocksak. This illustration photo, June 22, 2017, shows a Japan-Yen note. REUTERS/Thomas White/Illustration

By Jamie McGeever

(Stocksak). – A look at what lies ahead for Asian markets from Jamie McGeever

The Bank of Japan is not feeling the heat. A little.

The BOJ will announce its policy decision Friday in a calmer market than just a few days ago. Economists anticipate no change in the bank’s ultra-loose stance or an upward revision of the inflation outlook.

Other Japanese data due Friday include inflation and unemployment. These could also influence trading sentiment in Asia.

The dollar has fallen to a 3-week low against the Japanese yen. This is below the level which prompted the historic yen buying intervention by the BOJ on Sept. 22, 2009. For now, it appears that two subsequent rounds of suspected intervention have succeeded. (Graphic: Yen and BOJ intervention, https://fingfx.thomsonreuters.com/gfx/mkt/byvrlomlgve/BOJFX.png) (Graphic: Japan 10-year yield & BOJ cap, https://fingfx.thomsonreuters.com/gfx/mkt/lbvggrjgqvq/BOJ.png)

A wider pullback in dollar has not only helped the BOJ, but investors are beginning to consider a more aggressive Fed beyond the expected 75 bps rate increase next week. An easing of financial conditions has also helped markets more broadly.

The Dow is up five consecutive days, its best run since August. It is now back below 4%, and MSCI Asia ex Japan is up three consecutive days, its best stretch in seven months.

It’s more complicated than that. Meta Platforms Inc shares fell 25% after its Q3 results scared investors and hammered tech sector. Next up with earnings are Amazon (NASDAQ) and Apple (NASDAQ).

There are other reasons to believe this week’s rally’s “risk on” could soon fade.

Although it may not directly affect markets on a daily basis, there is still war on Europe’s doorstep. After Chinese President Xi Jinping won his third term, many cities and districts in China have increased their COVID-19 lockdowns.

Three important developments could give more direction to the markets on Friday:

Bank of Japan policy determination (no change expected).

September U.S. inflation PCE

Earnings in the U.S. (Apple, Amazon).

News Source and Credit

Stocksak Editorial

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