Yen advances broadly; dollar falls
Japanese markets were closed for a public holiday, leaving the yen as the main indicator of possible investor angst.
In midmorning trading, the Japanese currency gained 0.9% to 147.52 per dollar, although not far off from the 3-1/2-month low of 149.19 hit last week as investors fretted about Japan's political and fiscal outlook. It also nudged 0.5% higher against the euro to 172.05 and against sterling to 198.60, up 0.4%.
Prime Minister Shigeru Ishiba's Liberal Democratic Party returned 47 seats, short of the 50 it needed to ensure a majority in Japan's 248-seat upper chamber, where half the seats were up for grabs.
Ishiba vowed to stay on in his role even as some of his own party discussed his future and the opposition weighed a no-confidence motion.
'Since Tokyo markets were closed for Marine day today, we have to see what happens tomorrow: how the markets respond,' said Marc Chandler, chief market strategist, at Bannockburn Forex in New York.
'I know some people are saying that with the LDP party losing its majority, this could mean a shift in policy, but I don't see it. I think people were just caught leading the wrong way on dollar/yen thinking that the election outcome was going to be a negative for the yen.'
The election result, while not entirely a shock to markets, also comes at a tricky time for a country trying to get a tariff deal with US President Donald Trump before an August 1 deadline. 'Japan's political picture has become more complicated, with investors also focusing on the US-Japan tariff row,' said Roberto Mialich, global FX strategist at UniCredit.
The increased political fragility is likely to constrain the Bank of Japan's ability to tighten monetary policy in the near term, said David Chao, global market strategist for Asia Pacific at Invesco. 'It may be reluctant to add further pressure to an already volatile landscape.'
The euro was up 0.4% at $1.1681, while sterling last fetched $1.3488, up 0.6%. The dollar index, which measures the US currency against six others, was down 0.5% at 97.969.
The European Central Bank is due to meet this week and is expected to hold rates steady after a string of cuts, while investor attention has been on whether the Federal Reserve succumbs to pressure from Trump to cut interest rates.
'We doubt ECB President Christine Lagarde will shake things up too much ahead of the central bank's summer break, although there may be some continued concerns over recent euro strength and particularly the direction of tariffs,' said Chris Turner, ING's global head of markets.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
2 hours ago
- Business Recorder
FM Dar arrives in Washington to discuss bilateral trade, economic cooperation
Deputy Prime Minister and Foreign Minister Mohammad Ishaq Dar has arrived in Washington DC, where he is scheduled to meet his US counterpart, Secretary of State Marco Rubio, at the Department of State. They will discuss important facets of Pak-US relations exploring ways and means to strengthen bilateral ties, with a particular focus on promoting trade, investment and economic cooperation, state-run media Radio Pakistan reported. The deputy prime minister is also scheduled to speak at the US think tank, The Atlantic Council, sharing Pakistan's perspective on regional and global issues as well as the future of Pak-US relations. Pakistan's Ambassador to US Rizwan Saeed Sheikh and senior embassy officials received Dar at the train station in the US capital. Reciprocal tariff: Pakistan officials to meet Trump administration, Bloomberg reports During his week-long visit, Dar attended high-level signature events of Pakistan's UN Security Council (UNSC) presidency in New York, while he met UN Secretary General António Guterres, on the sidelines of the High-Level Political Forum (HLPF) on Sustainable Development, as well. A day ago, Bloomberg, quoting US State Department Spokesperson Tammy Bruce as saying, reported that a Pakistani delegation will soon meet the administration of US President Donald Trump in a bid to reach an agreement on a trade deal. In a US Department of State press briefing on Wednesday, Bruce said she will attend the meeting between the Pakistani delegation and US officials. Islamabad is looking forward to the 29% reciprocal tariffs to be lifted that the Trump administration levied initially, Bloomberg said. The South Asian country has proposed to increase imports of soybeans and cotton, while it already is the second-largest buyer of US cotton by value, after China. Whereas, Pakistan's biggest export destination is the United States. Bilateral ties between Pakistan and US have improved in recent times, with Trump's holding a rare meeting with Field Marshal Asim Munir at the White House. The FO stated on July 19 that FM Dar's visit is an indication of Pakistan's increasing importance in both its relations with the US and the global landscape. Moreover, in order to complete a trade agreement, Finance Minister Muhammad Aurangzeb has also visited the United States and met with US Secretary of Commerce Howard Lutnick and US Trade Representative Jamieson Greer in Washington recently to advance economic cooperation, as per the Ministry of Finance. Reuters last week reported that the negotiations, focused on reciprocal tariffs, are part of a broader push to reset economic ties at a time of shifting geopolitical alignments and Pakistan's efforts to avoid steep US duties on exports.
Business Recorder
5 hours ago
- Business Recorder
PSX opens higher amid Pakistan's credit rating upgrade
The Pakistan Stock Exchange (PSX) opened on a positive note, as investors cheered S&P Global's upgrade of Pakistan's sovereign credit rating to 'B—' from 'CCC+'. The benchmark KSE-100 Index gained nearly 400 points during the opening minutes of trading on Friday. At 10:25am, the benchmark index was hovering at 139,070.78 level, an increase of 378.12 points or 0.27%. Buying was observed in key sectors including automobile assemblers, commercial banks, oil and gas exploration companies, OMCs and power generation. Index-heavy stocks including HUBCO, ARL, MARI, OGDC, PPL and SNGPL traded in the green. In a key development, S&P Global raised Pakistan's sovereign credit rating to 'B-' from 'CCC+' and placed it on a 'stable' outlook on Thursday, saying the country's finances and reserves had been stabilised by International Monetary Fund support. On Thursday, PSX witnessed a bearish trend as investor confidence took a hit due to mounting macroeconomic concerns. Surging inflation, coupled with the expected rupee slide on higher imports, further fueled the negative sentiments. The benchmark KSE-100 index lost 561.69 points, or 0.40%, to settle at 138,692.67 points. Internationally, Asian shares eased from highs on Friday, with Japanese markets retreating from a record peak, as investors locked in profits ahead of a crucial week that includes US President Donald Trump's tariff deadline and a host of central bank meetings. The dollar gained against the yen after bouncing off a two-week low on Thursday, helped by some firm US economic data, while Japan's currency was weighed down by political uncertainty amid media reports Prime Minister Shigeru Ishiba will step down. Benchmark Japanese government bond yields hovered just below the highest since 2008. Japan's broad Topix index, which had jumped more than 5% over the previous two sessions to reach an all-time high, pulled back 0.7%. The Nikkei slipped 0.5% from Thursday's one-year high. Hong Kong's Hang Seng lost 0.5% and mainland Chinese blue chips declined 0.2%. Australia's equity benchmark declined 0.5%. At the same time, US S&P 500 futures added 0.2%, after the cash index edged up slightly to a new record closing high overnight, buoyed by robust earnings from Google parent Alphabet. The tech-heavy Nasdaq also marked a record high. MSCI's gauge of stocks across the globe edged down 0.1%, but remained just below an all-time peak from Thursday. This is an intra-day update
Business Recorder
6 hours ago
- Business Recorder
Asian stocks slip from highs, dollar gains as markets brace for crucial week
TOKYO: Asian shares eased from highs on Friday, with Japanese markets retreating from a record peak, as investors locked in profits ahead of a crucial week that includes U.S. President Donald Trump's tariff deadline and a host of central bank meetings. The dollar gained against the yen after bouncing off a two-week low on Thursday, helped by some firm U.S. economic data, while Japan's currency was weighed down by political uncertainty amid media reports Prime Minister Shigeru Ishiba will step down. Benchmark Japanese government bond yields hovered just below the highest since 2008. Japan's broad Topix index, which had jumped more than 5% over the previous two sessions to reach an all-time high, pulled back 0.7%. The Nikkei slipped 0.5% from Thursday's one-year high. Hong Kong's Hang Seng lost 0.5% and mainland Chinese blue chips declined 0.2%. Australia's equity benchmark declined 0.5%. At the same time, U.S. S&P 500 futures added 0.2%, after the cash index edged up slightly to a new record closing high overnight, buoyed by robust earnings from Google parent Alphabet. The tech-heavy Nasdaq also marked a record high. MSCI's gauge of stocks across the globe edged down 0.1%, but remained just below an all-time peak from Thursday. The index is on course for a 1.3% weekly advance, buoyed in large part by optimism for U.S. trade deals with the European Union and China, following an agreement with Japan this week. Next week, in the U.S. alone, investors need to contend with Trump's August 1 deadline for trade deals, a Federal Reserve policy meeting, the closely watched monthly payrolls report, and earnings from the likes of Amazon, Apple, Meta and Microsoft. The Bank of Japan has its own policy announcement on Thursday, and Prime Minister Ishiba's Liberal Democratic Party holds a meeting the same day. That's after the European Central Bank held rates steady on Thursday, pausing its easing campaign as it waits to assess any impact from U.S. tariffs. The euro ended the session down 0.2% against a buoyant dollar, and was little changed on Friday at $1.1743 . The U.S. currency advanced 0.3% to 147.37 yen , adding to Thursday's 0.4% gain. Trump kept the pressure on Fed Chair Jerome Powell to cut rates after a rare presidential visit to the central bank on Thursday, although he said he did not intend to fire Powell, as he has frequently suggested he would. U.S. 10-year Treasury yields edged down to 4.39% on Friday, effectively erasing an advance on Thursday. Equivalent Japanese government bond yields eased 0.5 basis point to 1.595%, just off this week's high of 1.6%, a level last seen in October 2008. JGB yields have been rising on concerns the political scale is tilting more towards fiscal stimulus, after big gains for opposition parties backing consumption tax cuts in Sunday's upper house election. Pressure is building on the more fiscally hawkish Ishiba to quit after his coalition lost its majority in the vote, after doing the same in lower house elections last October. Gold was flat at around $3,368 per ounce, keeping it on course for a 0.5% rise this week. Brent crude futures gained 0.3% to $69.35 a barrel, while U.S. West Texas Intermediate crude futures added 0.2% to $66.18 per barrel.
