Hi everyone! It’s me, Ekaterina Nedachina, and you are watching a recap of the Asian session on August 29. Stock markets show growth in the last week of summer. After Wall Street rallied the day before, Asian stock indexes continued to rise.
Japan’s index hit a two-week high. Australian equities rose on the back of commodity gains. Markets in India and China were also affected by economic and political events.
As a rule, August is one of the most negative months for stock markets. Indexes usually end the last month of summer in the red. In general, major US indexes follow this trend.
Wall Street is bracing for losses as Treasury yields rise. US Treasuries, in turn, are soaring in anticipation of another Fed rate hike. The Asia-Pacific region has its own triggers. The main one is the Chinese economy.
Ahead of the release of China’s economic activity index, investors remain vigilant. August’s figures are likely to confirm that China’s economy continues to deteriorate. At the same time, a number of US data releases this week are expected to show a different picture.
Markets will closely watch the US indicators as they may shed light on the US Federal Reserve’s interest rate policy.
Therefore, today’s Asian session started cautiously, and the US dollar index even tested the support of 103.83.
On Tuesday, the US dollar declined slightly against the G6 currencies. However, the volatile Asian session helped the greenback to change red figures to green ones several times and vice versa.
Perhaps the euro’s decline following the release of unexpectedly weak data on the German economy was one of the reasons for the change in momentum. The eurozone’s leading economy saw its consumer sentiment index fall to its lowest level since May, and this sentiment put pressure on the euro.
However, US dollar bulls and bears have been clashing and taking turns to move the trade in their favor. As a result, the greenback showed high volatility, moving within the daily range of 103.8-104.1. Notably, the US currency has been strengthening for 6 weeks in a row. It looks like it is preparing to close with another 2% gain in August.
This week’s fresh US statistics show the resilience of the US economy to aggressive central bank policy. The prospects for high rates for a long time increase, pushing the country’s currency to another high.
Data on home sales, GDP for the second quarter, and several reports on the labor market in the US will be crucial for the forex market this week. Since the Fed’s further steps will largely depend on the incoming data, markets will scrutinize these data.
While investors anticipate optimistic news from the US, Japan’s economy unexpectedly presented several unpleasant surprises. According to reports released today, the unemployment rate in the world’s third largest economy unexpectedly rose to 2.7%. The country’s ratio of jobs to applications fell to a 13-month low.
In addition, Toyota Motor today suspended operations at all 14 of its assembly plants in Japan. The reason for the disruption of assembly lines was reportedly system malfunctions.
Notably, Japan’s auto industry did not delay production even during the global chip shortage. This was one of the reasons why Toyota took the lead in global sales a few years ago.
Meanwhile, the Japanese yen is under constant pressure from the interest rate gap between Japan and the US. Low yields make the Japanese currency an easy target for short traders. Since the beginning of the year, the Asian currency has fallen about 11% against the US dollar.
In the long run, this pressure may increase if the US statistics turn out to be robust enough. As for Tuesday’s Asian session, the dollar/yen pair is falling on the daily time frame within the range of 146.3-146.6.
00:00 Introduction
00:34 Asia-Pacific Triggers
01:28 USDX
02:55 Waiting for fresh statistics from the USA
03:31 Japanese unemployment rate
03:59 And Toyota has its own worries
04:30 USD/JPY
05:35 What to expect from the Bank of Japan
06:16 Economic situation in China
07:39 AUD/USD
08:23 NZD/USD
08:41 USD/INR
09:25 Results
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