### Summary
The global economy is showing signs of decoupling, with the US economy remaining strong and China's economy disappointing at the margin. The recent data suggests that the US economy is resilient, with consumption and other indicators pointing in a positive direction. However, there are concerns about the bear steepening of the US curve and the repricing of the long end of the curve. In contrast, China's economy continues to struggle, with weak data and monetary policy easing. Japan has surprised with positive data, but there are questions about whether the current inflation shift will lead to tighter monetary policy. Overall, there are concerns about a potential global economic recession and its impact on various economies.
### Facts
- 💰 Despite the decoupling of the US and China economies, concerns remain about the negative impact of a China slowdown on global growth.
- 💹 Recent data show that the US economy, particularly consumption, remains resilient.
- 🔒 The bear steepening of the US curve and the repricing of the long end of the curve are causing concerns.
- 🇨🇳 In China, weak data on consumption and investment and declining house prices continue to affect the economy. The PBoC has eased monetary policy.
- 🇯🇵 Japan's 2Q data surprised with strong export growth, but there are concerns about the impact of a potential inflation shift on global yields.
- 🌍 The global economy is at risk of recession, with concerns about the impact on emerging market economies and the US economy.
Japan's Ministry of Finance plans to raise its assumed long-term interest rate to 1.5% for the fiscal year 2024/25, up from the current record-low of 1.1%, indicating a potential strain on the country's budget as it is set to exceed 114 trillion yen ($782.64 billion).
Asian currencies against the dollar had minor fluctuations, with the Japanese yen, Singapore dollar, and Taiwanese dollar showing slight gains, while the Chinese yuan experienced a slight decline; overall, there were small changes compared to the end of 2022.
Japan will only intervene in the currency market if the yen drops below 150 to the dollar and becomes a major political issue for Prime Minister Fumio Kishida, according to a former central bank official involved in Japan's past market interventions.
The US dollar remains strong against major peers and the yen, as Treasury yields rise amid expectations of high US interest rates for a longer period, while China's central bank sets a stronger-than-expected daily midpoint for the yuan to counter mounting pressure on the currency.
The combined footprint of Japan and China in the US Treasury market is at its lowest on record, leading to speculation that they may sell dollars and liquidate US Treasuries to support their currencies without causing significant market disruption.
The Bank of Japan will maintain its current monetary policy approach as underlying inflation remains below the 2% target, despite core consumer inflation staying above target for the 16th straight month in July, according to BOJ Governor Kazuo Ueda.
The USD/JPY spiked to a cycle high but reversed course, while weak labor market figures were reported in both the US and Japan, supporting the dovish stance of the Bank of Japan.
Former Bank of Japan board member Goushi Kataoka believes that the central bank can only shift away from its easy monetary policy once it has achieved its 2% inflation target sustainably, with wage negotiations in 2024 playing a key role in this process. Kataoka expects the Bank of Japan to gradually remove its yield curve control and negative interest rate policies before exiting its easy policy. He also emphasizes the importance of cooperation between the Japanese government and central bank in achieving the inflation target.
The yen rebounded from a 10-month low against the dollar after Japan issued a strong warning about sharp currency moves, increasing the likelihood of government intervention if the slump continues.
Tokyo stocks rise as a cheaper yen supports the market, despite falls on Wall Street and concerns about another US Federal Reserve interest rate hike.
The Japanese yen has reached a 10-month low against the US dollar, while the euro and sterling remain near three-month lows, as investors show confidence in the US economy despite global growth concerns.
The dollar strengthens against the yen and keeps the euro and sterling near three-month lows as investors rely on the resilience of the U.S. economy, while China's onshore yuan hits a 16-year low due to a property slump and weak consumer spending.
Asian currencies, including the Japanese yen and the Singapore dollar, are trading against the US dollar with varied movements, while the year-to-date percentage changes for the currencies show fluctuations.
Asian equities face a cautious start to trading while the yen strengthens following potentially hawkish remarks from the Bank of Japan governor, with futures for Australia slightly higher, US-listed Chinese stocks falling, and contracts for Japan showing a small gain.
The yen strengthened and government bonds slumped as traders reacted to potentially hawkish comments from Bank of Japan Governor Kazuo Ueda on the negative interest rate policy, causing Japanese bank shares to jump and the benchmark bond yield to rise.
The Bank of Japan has signaled a possible early end to its easy money stance, with the central bank considering interest rate hikes and an early end to its bond-buying policy, which caught markets off guard and caused the yen to surge and Japanese government bond yields to reach a 9-year high.
The Japanese yen strengthens against the US dollar as Bank of Japan Governor Kazuo Ueda hints at a potential shift away from negative interest rates.
Japanese long-term interest rates and the yen rose after Bank of Japan Governor Kazuo Ueda hinted at the possibility of ending the bank's negative interest rate policy.
The Bank of Japan's potential shift away from negative interest rate policy has ignited the Japanese Government Bond and currency markets, with the yen seeing its biggest rise in two months and the 10-year JGB yield reaching its highest point in almost a decade.
Japan's ruling party lawmaker Hiroshige Seko supports maintaining an ultra-loose monetary policy, following comments by the Bank of Japan governor that caused the yen and bond yields to rise.
The dollar remains steady ahead of a key U.S. inflation report, but rises against the yen as traders digest comments from Japan's central banker on a possible early exit from negative interest rates.
The US dollar remains stable in Asian trades as the yen and sterling experience slight fluctuations due to upcoming central bank meetings, including the Bank of Japan's policy meeting, the US Federal Reserve's hawkish pause, and the Bank of England's possible interest rate increase.
The Bank of Japan is expected to maintain ultra-low interest rates and reassure markets that monetary stimulus will continue amidst China's economic struggles and the global impact of US interest rates.
The US dollar remained strong against other currencies as traders awaited the Federal Reserve's rate decision, while the yen hovered near a 10-month low amidst speculation of intervention.
The Bank of Japan has decided to maintain its ultra-loose policy and keep interest rates unchanged due to uncertainties in domestic and global economic growth.
The Japanese yen weakened and stocks and bonds remained under pressure as investors prepared for U.S. interest rates to remain high, despite the Bank of Japan sticking to ultra-easy monetary policy and making no changes to its outlook.
If the Japanese yen weakens beyond 150 to the dollar, the Bank of Japan could be forced to hike rates sooner than expected, which may lead to the unwinding of the yen carry trade and a return of Japanese capital to domestic bond markets, potentially triggering market volatility.
The yen weakened against the dollar as the Bank of Japan announced it would maintain its accommodative monetary policy, with little indication of rolling it back.
The Japanese yen is approaching the key level of 150 per dollar, increasing the likelihood of forex intervention by Japanese authorities, while the US dollar continues its gains after the Federal Reserve signaled a longer period of higher interest rates.
Asian currencies showed mixed movements against the US dollar, with the Japanese yen slightly down, the Singapore dollar up, and the Taiwanese dollar unchanged, among others; overall, there has been varied performance in currency rates across the region in 2023 so far.
Investors are concerned about possible intervention as the yen approaches 150 per dollar, but the Bank of Japan may find it difficult to justify and achieve currency support due to the hesitation in exiting an ultra-easy monetary policy and the commitment to market-determined exchange rates.
Japanese stocks soar as the yen reaches its lowest point in nearly a year and the US avoids a government shutdown, while other equity markets in the region remain mixed.
The Bank of Japan is considering the eventual end of its ultra-loose monetary policy, with some policymakers discussing the conditions and timing of a future exit, according to a summary of opinions from their September meeting, leading to a rise in government bond yields.
The dollar rose due to expectations of higher U.S. interest rates, while the yen reached a one-year low, leading to concerns about intervention by Japanese authorities; the euro and pound also fell, while the U.S. Congress passed a funding bill to avoid a government shutdown.
Gold and silver prices are falling due to a strong U.S. dollar, rising U.S. Treasury yields, and upbeat risk attitudes, while Asian and European stocks are mixed, and the Bank of Japan is monitoring the depreciation of the yen against the U.S. dollar.
The yen briefly fell below 150 against the dollar despite efforts by the Japanese government to prevent the decline, as investors anticipate the U.S. Federal Reserve to maintain high interest rates.
Asian currencies against the dollar remained relatively stable, with minimal changes observed in the latest rates, according to data compiled by Reuters.
Concerns surround the upcoming release of U.S. payrolls data and how hawkish the Federal Reserve needs to be, as global markets experience a period of calm following a tumultuous week that saw Treasury yields rise to 16-year highs, crude oil prices drop, equities decline, and the yen strengthen. Japanese government bond yields are also causing concern, as investor sentiment towards the Bank of Japan's stimulus remains low.
Japan's central bank is under pressure to reconsider its ultraloose monetary policy due to factors such as a weak yen, post-pandemic inflation, and the Russia-Ukraine war.
Japan's top currency diplomat, Masato Kanda, stated that the country will take appropriate action in the forex market when necessary, while also noting that the yen is still considered a safe asset along with the Swiss Franc and US Dollar, and that the impact of the Middle East crisis on the Japanese economy cannot be foreseen.
The International Monetary Fund (IMF) warns that China's weak economic recovery and the risk of a prolonged property crisis could negatively impact Asian economies, especially those that export raw materials to China, while the strength of the U.S. economy provides less support to the region due to its service industry-focused growth. Additionally, the IMF highlights the potential impact of Japanese financial policy changes on other countries, particularly if further actions are taken by the Bank of Japan.
