Stocks up on US rate hopes
TOKYO
Markets mostly rose on July 12 after a largely negative day on Wall Street despite growing confidence of a U.S. interest rate cut, while the yen saw big swings as speculation swirled that Japan had stepped into forex markets to support the currency.
A smaller-than-expected read on the June consumer price index ramped up bets on the Federal Reserve lowering borrowing costs in September, and possibly again before January.
The news came after the central bank's boss Jerome Powell said decision-makers would not wait until inflation had hit the bank's two percent target before loosening monetary policy, warning that "if you waited that long, you've probably waited too long."
Most of Asia extended the July 11’s rally.
Analysts, meanwhile, said the softer U.S. inflation print provided Japanese authorities the perfect opportunity to step into forex markets to provide support to the yen, which surged against the dollar on July 11.
The Japanese currency spiked from around 161.5 per dollar to as strong as 157.44, fuelling talk that officials had intervened again, having done so in April when the yen hit a 38-year low.
"The pronounced move in the yen appears to be coming on the back of combined impact from U.S. inflation and intervention by Japanese authorities," Charu Chanana at Saxo Markets told AFP.
"There seems to be a new playbook for Japanese interventions, coming in along with supportive fundamentals, making the strength in yen somewhat more durable."
While speculation swirled about official involvement, Japan's top currency diplomat Masato Kanda told reporters that authorities were "not in a position to comment on whether they intervened in the market."
