Key points

• Yen experiences volatility due to suspected intervention; Asian shares eye weekly gains on rate cut bets.
• U.S. dollar shows mixed performance, with slight declines against yen and other major currencies.

The yen experienced significant swings on Friday, reflecting investor nervousness after Tokyo likely intervened to support the Japanese currency following a cooler-than-expected U.S. inflation report.

Yen volatility and Asian stocks rise on Fed rate cut hopes

The yen’s movement against the dollar and other major currencies took center stage. Meanwhile, Asian stocks celebrated the increasing likelihood of a September rate cut from the Federal Reserve.

The dollar was last 0.05% lower at 158.79 yen after having risen more than 0.3% to an intraday high of 159.45 yen and falling 0.7% to a low of 157.75 yen within the span of the early Asian session.

Also read: Asian stocks reach 27-month high, dollar falls on rate cut speculation

Yen surges amid speculation of Japanese intervention

Speculation remains high that Japanese authorities intervened in the currency market to shore up the yen on Thursday, after it surged nearly 3% against the dollar intraday.

Local media attributed the move to a round of official buying from Tokyo to support a currency that has been at 38-year lows, though authorities have been reticent to provide any hints.

Elsewhere, MSCI’s broadest index of Asia-Pacific shares outside Japan was little changed but was on track for a 1.6% increase for the week, bolstered by the growing bets of imminent U.S. rate cuts.

These expectations were reinforced after Thursday’s U.S. consumer price figures showed cooling inflation, and as Federal Reserve officials expressed increasing confidence in controlling inflation.

Asian stocks fall as Wall Street leads decline

Asian stocks did not rally on Friday, tracking a negative lead from Wall Street as investors shifted focus to smaller companies following the U.S. inflation print.

Japan’s Nikkei fell 2.3%, dragged down by technology stocks. S&P 500 futures were little changed, while Nasdaq futures fell 0.02% and EUROSTOXX 50 futures remained flat.

Picture: Japan’s Nikkei down over 2% as seen on the VT Markets app.

In other currency movements, sterling eased 0.03% to $1.29095 but hovered near a roughly one-year high hit on Thursday. Comments from Bank of England policymakers and better-than-forecast GDP data led traders to reduce bets on an August rate cut in Britain.

The euro gained 0.04% to $1.0871, while the U.S. dollar languished near a one-month low against a basket of currencies.

Oil prices climb on strong demand and easing U.S. inflation

Oil prices rose in early Asian trading hours on Friday as signs of strong summer demand and easing inflationary pressures in the United States boosted investor confidence. Brent futures rose 0.4% to $85.74 per barrel, while U.S. West Texas Intermediate crude gained 0.56% to $83.08 a barrel.

Gold edged 0.07% lower to $2,413 an ounce, showing slight adjustments as markets reacted to the broader economic signals. These developments underline the intricate dance of market forces and investor sentiments, which continue to shape the financial landscape in unpredictable ways.

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