Weakness in the yen was providing exporters in Japan with some welcome relief on Monday, but other stock markets around the region were struggling for traction at the start of the new week.
The decline in the Japanese currency, as well as other Asian peers, comes amid some stabilisation in the US dollar, which rose on Friday for the first time in six sessions after a week in which investors continued to weigh up whether the Federal Reserve would raise interest rates this year.
Japan’s broad Topix was up 0.4 per cent and the Nikkei 225 gained 0.2 per cent. Australia’s S&P/ASX 200 was 0.1 per cent higher.
Hong Kong’s exchange operator rolled out a circuit breaker for stocks in the territory, which it said would prevent extreme price volatility. The Hang Seng was down 0.5 per cent, while on the Chinese mainland, the Shanghai Composite was down 0.4 per cent and the tech-focused Shenzhen Composite was 0.5 per cent lower.
The yen was 0.5 per cent weaker on Monday at ¥100.70 per dollar. Last week, the currency broke through the ¥100 barrier for the first time since the aftermath of the UK’s vote in June to leave the EU, prompting Japanese government officials to remark they were “closely watching” moves in the foreign exchange market.
Data from the US Commodity Futures Trading Commission showed hedge funds remained bullish on the yen, and increased their net long positions in the currency by $700m to $5.3bn last week, noted ANZ Banking Group.
Owing to sliding expectations about a rate rise from the Fed this year, hedge funds trimmed their long bets on the US dollar by $200m to a net long position of $14.5bn.
On Sunday, Stanley Fischer, the vice-chairman of the Fed’s Board of Governors, said core inflation was within “hailing distance” of the bank’s 2 per cent price target, a comment regarded as hawkish for interest rates.
The outlook for monetary policy will remain in focus this week ahead of the Kansas City Fed’s annual central banker symposium in Jackson Hole, Wyoming.
The dollar index, a measure of the US currency against a basket of global peers, was up 0.3 per cent at 94.812 on Monday. Gold, which is also sensitive to interest rate expectations, was down 0.5 per cent at $1,333.96 an ounce.
The yield (which moves inversely to price) on the interest-rate sensitive US 2-year Treasury rose as high as 0.7743 per cent, its highest level in two months.
The British pound remained under pressure in Asia, down 0.2 per cent at $1.3050, following rumours on Friday that Theresa May, UK prime minister, could invoke as early as next April the clause that would begin formal EU exit negotiations.
Oil prices were taking a breather on Monday after solid gains last week amid persistent hope major producers could use an informal Opec meeting next month to agree to an output freeze. Brent crude, the international benchmark, was down 1.3 per cent today at $50.22 a barrel, while West Texas Intermediate was down 1.1 per cent at $48.01.
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