Expect more dollar-yen upside, says BofA
The dollar-yen is likely to see further upside as policymakers in Japan are “somewhat conflicted” over whether to intervene to defend its currency, said Claudio Piron, co-head of fixed income and foreign exchange. in Asia at Bofa Securities.
Although the dollar-yen is approaching levels that have warranted action by Japanese authorities in the past, Piron said we’re not “quite there yet.”
“The market will continue to test and probe the rise in the dollar-yen until policymakers show their hand,” he said.
— Charmaine Jacob
Traders see 90% chance of another 75 basis point Fed hike in September: FedWatch
The likelihood of the U.S. Federal Reserve raising interest rates another 75 basis points at its September meeting has risen to 90%, according to CME Group’s FedWatch tracker on federal funds futures betting.
That’s up from last week’s 82% probability for a three-quarter point rise.
The probability of a 50 basis point hike is now 10%, FedWatch showed.
– Jihye Lee
North Asian refiners will receive a full allocation of Saudi crude in October, Reuters reports
At least three North Asian refiners have been told by Saudi Aramco that they will receive full contract volumes of crude in October, Reuters reported, citing people with knowledge of the matter.
In its first cut in four months, Saudi Arabia slashed official selling prices to Asian buyers for the month.
Brent crude futures fell 1.50% to $91.45 a barrel, while US West Texas Intermediate fell 1.60% to $85.40 a barrel.
— Lee Ying Shan
Japan travel stocks jump on reports of group travel rule scrapped
US to expand restrictions on chip and tool exports to China, Reuters reports
The U.S. Commerce Department plans to issue new regulations relating to restricting exports of chipmaking equipment to Chinese factories that produce advanced semiconductors, Reuters reported, citing people familiar with the matter.
The rules will be based on letters sent to KLA, Lam Research and Applied Materials earlier this year, when they were informed that government-issued licenses would be required to sell such equipment to buyers who manufacture chips with processes less than 14 nanometers.
The new regulations would likely include additional actions against China, sources told Reuters, adding that they could be amended and released later than expected.
Economic council lowers growth forecast for New Zealand
Economists from the New Zealand Institute of Economic Research have downgraded the country’s growth outlook, citing persistently high inflation and interest rates.
They now expect annual gross domestic product for 2022-23 to grow 2.5%, down from their previous forecast of 2.9%.
GDP for 2023-24 is now expected to grow by 1%, a sharp drop from its previous forecast of a 1.9% increase released in June, while the 2024-25 forecast has been revised to 1.5% against 2.1%.
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Yen intervention unlikely to be effective: National Australia Bank
Unilateral government intervention in the Japanese yen is unlikely to be effective, says National Australia Bank — after officials over the weekend said the government needed to take action to deal with excessive declines in the yen.
“If the [Bank of Japan] really wants to stop the decline of the JPY, so they have to make changes to their ultra-easy policy, the pressure is mounting,” he wrote in a Monday note. a currency strategist at National Australia Bank
The yen last traded at 142.55 against the dollar.
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Oil prices fall on weaker demand outlook
Oil futures fell on demand concerns amid extended Covid measures in parts of China, alongside the potential for continued interest rate hikes around the world.
“Oil consumption is particularly sensitive to Covid lockdowns because transportation, the main use of oil, is severely constrained,” Commonwealth Bank of Australia analyst Vivek Dhar wrote in a note, adding that China accounted for up to to 16% of global oil demand last year.
— Lee Ying Shan