GGMA Market Brief: USDJPY drops on potential intervention ambush tactics
Good morning,
I hope all is well.
Asian equities sold off hard as the US semiconductor rout swept into the region, with Korea's Kospi slumping 8% to 7,639.26 and Seoul's sell-side sidecar curb triggered shortly after the open (Korea JoongAng Daily). Nikkei futures fell 2.38% and China's CSI 300 lost 2.39% as Meta's reported cloud-computing plans and Apple's talks with Chinese memory suppliers hit the AI-hardware complex (BBG). US futures turned lower too, with Nasdaq-100 contracts down 0.40% after Wednesday's midday recovery fizzled (BBG).
In FX and rates, the yen firmed 0.24% to 162.215 per dollar — still pinned near four-decade lows — with traders on alert after sources said Tokyo has shifted to ambush intervention tactics against yen short sellers rather than telegraphing action in advance (BBG) (Reuters). Japan's ten-year yield jumped 6.2 basis points to 2.767% after an auction drew weaker demand than average amid the heaviest foreign selling of Japanese bonds in years (BBG). The dollar index eased 0.13% to 101.281 as US rate-hike expectations were pared (Co), the euro edged up 0.11% to 1.139 (BBG), and European volatility futures rose 0.10 point to 17.40 while VIX futures firmed 0.165 point to 18.27 (BBG).
On the central bank front, Fed Chair Kevin Warsh said inflation risks have come down in recent weeks and pledged independence, damping speculation about a July hike (Co); ECB President Lagarde said risks to inflation and growth are now more broadly balanced (BBG); BoE Governor Bailey insisted rate cuts are not back on the table (Reuters); and Greece's Stournaras sees a smaller likelihood of a further ECB hike as Governing Council views splinter (BBG). In Asia, a sliding yen and a robust economy are giving the BoJ more grounds for an early hike (BBG), while elevated Korean inflation supports the Bank of Korea's hawkish tilt (BBG).
On the data front, Australia's trade balance swung to its largest deficit in more than a decade on slumping exports, though the ASX 200 shrugged it off to close up 0.18% (Reuters).
On the corporate tape, OpenAI is discussing handing the US administration a stake, Meta is developing a cloud-infrastructure business that would sell access to its computing power, and SoftBank renewed its loan push backed by its OpenAI stake — keeping AI financing and capacity questions squarely in focus (BBG).
In commodities, gold rose 0.96% to 4,070.60 and silver gained 1.57% as the rates repricing supported precious metals (BBG), while crude fell 1.25% to 67.72 as Hormuz flows normalised following inconclusive US-Iran talks in Doha (Reuters).
Bitcoin added 0.65% to trade near 60,350 after Cantor argued the crypto bear market may be entering its final stretch (Coindesk).
Attention now turns to US payrolls, expected to slow sharply while wage growth holds firm — the first major test of the rates path since Warsh's remarks (LS).
Good luck today!