The yen fell about 2% against the dollar on Wednesday after Shigeru Ishiba said the economy was not ready for further hikes. This is the worst day since June 2022. The exchange rate fluctuated around 146.50 per dollar on Thursday, reaching its weakest level in a month.
Australian shares were little changed, as were Hong Kong stock futures, while S&P 500 contracts rose little changed after the index close on Wednesday. An index of U.S.-listed Chinese companies surged nearly 5% on Wednesday after mainland stocks listed in Hong Kong surged.
The dollar’s renewed exuberance added pressure on the yen as stronger-than-expected ADP jobs data prompted traders to reduce bets on an aggressive Federal Reserve interest rate cut. Swap traders announced about 33 basis points of policy easing at the central bank’s November meeting, down from 44 basis points last week.
Oil prices rose for a third day in a row in early Asian trading as U.S. President Joe Biden urged Israel to refrain from attacking Iran’s nuclear facilities and investors await Israel’s response to the Iranian missile attack.
Dollar strength indices rose Wednesday as Treasury yields rose. Amid heightened tensions in the Middle East, the yield on 10-year government bonds rose 5 basis points to 3.78% after hitting a low of 3.69% in the previous session. In Asian trading, U.S. yields were little changed, but Australian and New Zealand yields rose. Data Wednesday showed U.S. companies added more jobs last month than economists had predicted. This runs counter to other indicators showing a cooling labor market. Friday’s nonfarm payrolls figures will be the next important reading for workers’ health and the U.S. economy. “ADP employment figures are on the rise, suggesting the labor market is bending but not collapsing,” said Chris Larkin, head of E*Trade at Morgan Stanley. “Friday’s monthly jobs report will provide the final say on the current jobs situation and near-term market sentiment.”
In Asia, Bank of Japan official Asahi Noguchi is scheduled to speak on Thursday, and data scheduled to be released include Singapore S&P Global PMI figures and Jibun Bank PMI composite data. Markets in mainland China and South Korea were closed.
Jobs in USA
The U.S. nonfarm payrolls report will account for less than 0.5%, according to Bank of America Corp. strategists led by Meghan Swiber. “Even if the labor market surprises the stronger side, pricing will remain selective,” they wrote.
Marc Rowan, CEO of Apollo Global Management Inc., said the Fed’s aggressive policy easing risks overstimulating the economy.
In an interview with Bloomberg TV, he said, “It is not clear whether further interest rate cuts are necessary,” pointing to financing preparations and rising real estate prices.
Richmond Federal Reserve President Thomas Barkin said it was too early for the central bank to declare victory over rising prices. “While we have made substantial progress, significant uncertainty remains on both inflation and employment,” he said.
