Dollar Surges to New High Against Yen: Market Cautious Ahead of Intervention

New York, USA – Stocks and bonds experienced a decline today, while the dollar showed some strength, continuing its rebound from the previous day. Most of the G10 currencies saw losses, with the exception of the Japanese yen, which recovered after reaching a low not seen since May 1. The euro was negatively affected by slightly lower-than-expected German states’ CPI, leading to a drop in its value. Similarly, the British pound stabilized after briefly dipping below $1.2750. Despite this, some emerging market currencies like the Mexican peso and South African rand managed to post minor gains. However, the Chinese yuan faced a downward trend, failing to rise against the dollar since May 15.

In Asia Pacific, equities faced a sell-off, with the Chinese mainland indices being the only ones to resist the regional downturn that saw drops in Australia, Hong Kong, South Korea, and other smaller bourses. In Europe, the Stoxx 600 also declined by about 0.6%, mirroring the previous day’s performance. Looking ahead to the US market, futures indices signaled a potential lower opening of 0.5% to 0.7%. The bond market did not provide any relief either, with the 10-year JGB yield reaching its highest point since the end of 2011, and European benchmark yields also rising.

Gold prices saw a downward trend but managed to stay above the previous day’s low near $2340. On the other hand, WTI crude oil prices surged yesterday, almost reaching $80.30, the highest level since May 1. While it traded around $80.60 today, it has not settled above $80 this month, hitting a low of around $76 before last week.

In Australia, the CPI unexpectedly rose to 3.6% in April from 3.5% in March. This led to a reduction in the likelihood of a rate cut this year, with the futures market now projecting close to zero chance. Economic reports to look out for in Australia include April building approvals and private sector credit, which might help analysts fine-tune GDP forecasts due the following week. Meanwhile, Japan and China are also set to release important economic data this week.