The yen experienced significant volatility, swinging between losses and gains as investors reacted nervously to potential intervention by Tokyo following a cooler-than-expected US inflation report.
On Friday, the yen’s movements against the dollar and other major currencies drew significant attention. Meanwhile, Asian stocks were on track for a weekly gain due to increasing expectations of a September rate cut from the Federal Reserve.
The dollar was last up 0.1% at 159.10 yen, after reaching an intraday high of 159.45 yen and dropping to a low of 157.75 yen earlier in the day. Similarly, other yen crosses showed choppy movements but stabilized as the trading day progressed. The euro was last up 0.2% against the yen, and sterling also rose 0.2%, both reversing early losses.
Speculation abounded that Japanese authorities had likely intervened in the currency market on Thursday to support the yen, which had surged nearly 3% against the dollar at one point after the release of US inflation figures. The dollar ended Thursday’s session with a 1.7% loss against the yen, marking its largest daily decline since May.
Asian stocks displayed mixed performance. Tokyo’s Nikkei 225 index fell 2% to 41,388.92. Hong Kong’s Hang Seng index climbed 1.9% to 18,165.33, while the Shanghai Composite index dropped 0.2% to 32,965.52, despite China’s exports increasing by 8.6% in June, exceeding market expectations. Australia’s S&P/ASX 200 rose 0.8% to 7,952.20, and South Korea’s Kospi slipped 1.2% to 2,857.11.
On Wall Street, investors shifted focus from Big Tech shares to smaller companies. The Dow Jones Industrial Average edged up 0.1% to 39,753.75. However, the S&P 500 fell 0.9% to 5,584.54, and the Nasdaq Composite dropped 2% to 18,283.41. The Russell 2000 index of small-cap US companies surged 3.6%, driven by expectations of interest rate cuts that could boost small-cap profits.
The yield on benchmark 10-year US Treasury bonds decreased to 4.21% from 4.28% late on Wednesday.
