Japanese yen surged on speculations of another round of intervention by authorities
US stocks finished mixed on Wednesday after the head of the Fed said the cuts to interest rates are still likely this year. On the downside for risk sentiment, Powell said inflation is taking longer than expected to get under control. He also said the central bank’s next move is unlikely to be a rate hike. As a result, the S&P 500 fell 0.3%. the Dow Jones Industrial Average rose 0.2%, and the Nasdaq Composite shed 0.3%. For the week, the S&P 500 is down 1.6%, the Dow is down 0.9%, and the Nasdaq is down 2%.
In Asia, equities were mostly lower today after the Fed signaled it’s not planning to cut rates soon. Tokyo’s Nikkei 225 index opened with a decline, then trimmed losses to -0.1%. In South Korea, the Kospi edged 0.3% lower after the data showed the country’s consumer prices in April reached 2.9% year on year, a slower pace compared to the previous report. Hong Kong’s Hang Seng index added 2.3%. Other markets in China remained closed for the Labor Day holiday.
In currencies, the Japanese yen surged as much as 2% earlier on Thursday, driven by speculations of another round of yen-buying intervention by Japanese authorities. A weaker dollar following the Fed meeting added to positive momentum surrounding the yen after yesterday’s plunge. The USD index itself looks directionless on Thursday following solid losses witnessed during the previous session. The buck has settled around 105.70 after finding support in the 105.45 region.
Elsewhere, gold prices are back on the defensive after yesterday’s gains witnessed due to a weaker dollar along with lower Treasury yields. The XAUUSD pair briefly dipped below $2,300 before bouncing. On the upside, the bullion was capped by the $2,340 intermediate barrier. A failure to extend the ascent triggered renewed selling pressure today even as dollar weakness persisted. It looks like investors lacked dovishness in Powell’s speech yesterday, so the yellow metal failed to stage a more sustained and decisive ascent.