Hong Kong: The yen drifted higher on Thursday as traders waited to see if Tokyo would intervene in currency markets for a second day, while Japanese stocks edged up to a one-month high, led by exporters.
Japan’s solo intervention to weaken the yen on Wednesday arrived sooner than many market participants had expected, causing investors to suspect other Asian governments may keep their currencies weak and pushing up longer-term US Treasury yields.
“After Japan joined the club of Asian central banks by intervening in the FX market, investors will now look to determine how successful the policy will turn out be,” Mitul Kotecha, global head of foreign strategy at Credit Agricole CIB, said in a note.
“In the near term there will be wariness of further intervention to push the yen weaker, which will also keep other Asian currencies on the back foot.”
Asia’s currencies are a major focus among investors globally, especially with Chinese government setting the yuan’s mid-point for its trading range at a post-revaluation high for the fifth day in a row.
US Treasury Secretary Timothy Geithner will tell policymakers later in the day that he is looking for ways to get Beijing to move faster, his prepared remarks to Congress showed.
Japanese equities have been underperforming other advanced markets this year as the yen rose more than 11% against the dollar, threatening its export competitiveness, so Tokyo’s yen selling has caused a rush to search for bargains, especially among liquid exporter stocks.
The US dollar was down 0.4% at ¥85.38, not too far from Wednesday’s high of around ¥85.75 Dealers may test Japan’s resolve to keep the yen weak on Thursday.
Euro is down 0.3% against the yen at ¥111.17.
Japan’s Nikkei share average rose 0.7% to highest since 10 August. Toyota Motor Corp and TDK Corp were among the biggest lifts to the Nikkei.
The MSCI index of Asia Pacific stocks outside Japan slipped 0.2% on profit taking in the materials sector and after disappointing US economic data, though major US share indexes ended higher overnight.
Commodity sector has outperformed the MSCI index, climbing 20% since June compared with the index’s returns of 16%.
10-year US Treasury yield flat at 2.72% after climbing 4 basis points on Wednesday.
Gold edges up 0.1% to $1,267.35 an ounce after hitting a record high of $1,274.75 on Tuesday.
US crude fell for a third straight day, down 0.5% to $75.64 a barrel after Enbridge said U.S. regulators have agreed to a Friday restart of the company’s biggest pipeline from Canada, restoring crude supplies to Midwest refiners.