Key Takeaways:
Most Asian currencies traded in a limited range on Monday
Dollar stayed near a two-month low anticipating U.S. inflation data
Dollar weakened due to expectations of Fed interest rate cuts
Japanese yen strengthened against the dollar to a one-month high
Bank of Japan potentially ending negative interest rates policies
Other Asian currencies remained stable or slightly strengthened- Australian dollar fell due to decreased bets on Reserve Bank rate hikes
- Indian rupee steadied at six-month highs awaiting inflation data
Dollar index futures steadied above the 102 level after previous losses
Fed Chair’s comments and data on labor space cooling influenced market focus on Tuesday’s CPI data.- Asian stocks fell, with Japanese shares tumbling due to speculation of a central bank interest rate hike
- Topix index in Japan saw biggest drop since October, tech sector weighed down
- Shares in Australia and South Korea also declined
- US futures declined, S&P 500 and Nasdaq 100 slipped
- Japanese economic growth supports expectations of interest rate hike, yen strengthened
- Chinese equities rose due to the first rise in consumer prices since August
- US consumer price index figures to dominate economic data reports this week
- Further moderation in US prices would support disinflation narrative
- Mixed signals from US jobs data point to cooling labor market
- Fresh data on inflation, retail sales, and consumer sentiment expected next week
- Asian currency market subdued
US dollar near 2-month low
Focus on CPI data for market direction- Asian stocks fell on Monday after Japanese shares tumbled due to speculation of a central bank interest rate hike
- Tech sector weighed down Topix index in Japan, with chip stocks slumping
US futures declined following Wall Street falls, with S&P 500 and Nasdaq 100 slipping
Chinese equities traded higher, supported by first rise in consumer prices since August- US CPI figures to dominate economic data reports this week, with expectations for continued disinflation narrative
- Yields in Australia were flat, while dollar weakened and oil prices held a loss
Various key events related to CPI reports, jobless claims, industrial production, and more scheduled for the week
Portugal’s AD coalition won elections, and Biden pressures Israeli PM on Gaza crisis.
Asian Markets React to Speculation of US Inflation Data
Asian markets experienced mixed movements as traders reacted to a variety of factors affecting the global economic landscape. Most Asian currencies remained relatively stable on Monday, with the dollar anticipating U.S. inflation data and potential Fed interest rate cuts. The Japanese yen strengthened to a one-month high, while the Bank of Japan hinted at ending negative interest rate policies.
On the stock market front, Asian equities were impacted by speculation of a central bank interest rate hike in Japan, leading to declines in Japanese shares and tech stocks. In contrast, Chinese equities rose following the first increase in consumer prices since August.
With a focus on upcoming US consumer price index figures, market participants are closely watching for signals of disinflation. Mixed data on US jobs and expectations for further moderation in prices have led to uncertainty regarding the state of the labor market and inflation trends.
As the week progresses, upcoming data releases on inflation, retail sales, and consumer sentiment are expected to provide further clarity on the global economic outlook. Additionally, various key events, including elections in Portugal and diplomatic pressure on the Israeli Prime Minister regarding the Gaza crisis, add to the complexity of market dynamics.