© Reuters. FILE PHOTO: Passersby walk past an electrical visual display unit displaying the Japanese yen exchange rate against the U.S. dollar exterior a brokerage in Tokyo, Japan October 4, 2023. REUTERS/Issei Kato/File Characterize
By Jamie McGeever
(Reuters) – A glimpse at the day ahead in Asian markets from Jamie McGeever, financial markets columnist.
Asian markets are poised to rebound on Thursday following a relief bounce around the realm on Wednesday, with currency traders also bracing for a batch of inflation reports from across the continent.
Client trace data from South Korea, the Philippines, Thailand, and Taiwan have to give their respective exchange rates a nudge on Thursday, whereas Australian trade figures and retail sales from Singapore are also on tap.
Broadly speaking though, Asian market sentiment and direction will again be pushed by global factors. Especially the U.S. executive bond market.
The largest fall in the since Aug. 29 on Wednesday helped ease the stress that has built up in world markets now now not too long ago – the dollar fell, Wall Road roared back, and oil prices tumbled.
Oil’s sail is particularly mighty – impolite fell 5.5% to a one-month low. That was its biggest fall in over a year and entirely wipes out its year-on-year gains – oil is now now not inflationary.
Whereas the relaxation just isn’t any question welcome, traders realize it may now now not last. Global currency volatility on Wednesday spiked to its easiest since May, a day after U.S. Treasury market volatility also jumped to a five-month high.
And although U.S. yields fell across the board, yield curve steepening persisted as the 30-year yield pierced 5.00%. This rapid unwinding of curve flattening trades is seemingly to be hurting many speculators and leveraged funds.
The so-called ‘time duration top class’ – the compensation traders demand for taking on greater threat by maintaining long-dated bonds – continues to upward push.
Japanese assets, meanwhile, will also be delicate to that you can mediate of Bank of Japan activity in the domestic executive bond or currency markets on Thursday.
The yen steadied on Wednesday but is quiet languishing near 150.00 per dollar, the break of which precipitated waves of yen buying on Tuesday. Tokyo is now now not idea to have intervened, although that may be confirmed in Bank of Japan data on Thursday.
An esoteric corner of Japanese markets – yen faulty-currency basis – is at ranges in maintaining with outdated bouts of volatility. That is a broad measure of overseas demand for dollars and market stress, and the deeply negative ‘basis’ now is similar to late 2019, Japan’s FX intervention last year and the U.S. regional bank disaster this year.
have to rebound after slumping 2.3% on Tuesday, matching its biggest fall this year.
Nonetheless it can take more than one up day to reverse the momentum – the index is down 10 out of the last 12 trading classes, squeezed by the easiest 10-year domestic bond yield in a decade, and now also by the sudden burst of yen appreciation.
Right here are key traits that may offer more direction to markets on Thursday:
– South Korea, Philippines, Thailand inflation (August)
– India products and companies PMI (September)
– Australia trade balance (August)
(By Jamie McGeever; Editing by Josie Kao)