The yen broke through the significant psychological barrier of 140 against the dollar as it continued its rally from its weakest point in nearly 38 years in July.
On Monday, the yen appreciated by up to 0.6% against the dollar, reaching 139.96—its strongest level since July 2023. It has been the top-performing major currency this quarter, gaining 15% as investors anticipate a narrowing of the interest rate gap between the US and Japan. The Federal Reserve is expected to reduce US borrowing costs on Wednesday, with market speculation focusing on a potential cut of either 0.25 or 0.5 percentage points.
Asian stocks fluctuated between losses and gains on Monday, with hopes for a Federal Reserve rate cut balanced against signs of persistent weakness in China’s economy.
Hong Kong stocks suffered the largest decline in a week, falling after a series of weak Chinese economic data released on Saturday, which left traders speculating about whether authorities would implement aggressive stimulus measures to support the economy. Markets in Japan, South Korea, and mainland China were closed for a holiday, and Asian trading of Treasuries was also suspended.
MSCI’s broad index of Asia-Pacific shares outside Japan rose 0.3%, following a 0.8% increase last week.
The Hang Seng Index dropped 0.3% to 17,318.16 by midday.
Japan’s Nikkei was closed, but its futures traded at 36,315, compared to a cash close of 36,581, as recent yen gains put pressure on exporters. S&P 500 futures remained mostly flat, while Nasdaq futures slipped 0.1%.
Central banks in Japan and the UK are also meeting this week, both expected to maintain their current policies for now. A busy week of economic data releases includes US retail sales and industrial production figures.
