The Japanese yen jumped on Thursday after monetary authorities intervened in the foreign exchange market to strengthen the beaten currency for the first time since 1998, although analysts said Japan could face difficulties in holding the yen for a long time.

 

The dollar last fell 1.1% to 142.40 yen. After the intervention, it hit a low of 140.31 yen, having previously reached a new 24-year peak of 145.9 yen. The spread between the high and low of the day for the pair was the widest since June 2016.

 

The euro, the Australian dollar and the pound sterling also fell against the Japanese currency, but then recovered slightly.

 

"We have taken decisive action," Masato Kanda, Japan's deputy finance minister for international affairs, told reporters, answering in the affirmative when asked whether this meant intervention.

 

Confirmation of the intervention came just hours after the Bank of Japan decided to keep interest rates low to support the country's fragile economic recovery.

 

Bank of Japan Governor Haruhiko Kuroda told reporters that the central bank could refrain from raising rates or changing its dovish political leadership for several years.

 

By contrast, central banks around the world, most notably the U.S. Federal Reserve, are actively raising rates, and this policy divergence puts pressure on the yen.

 

However, according to analysts, Japan cannot continue to support the currency on a permanent basis.

 

"In the next three to six months, and maybe longer, as long as these monetary policy divergences persist and these differences persist, you will continue to see the yen weaken," said Brendan McKenna, international economist and currency strategist at Wells Fargo Securities.

 

"U.S. yields are up nearly six basis points or so today, while yields in Japan are down. Therefore, I think that the spread should continue to favor the US dollar, and this is what will lead to a weakening of the yen until the end of this year and possibly in early 2023," he added.

Chinese electric vehicle maker Nio has joined others in the industry in saying that US restrictions on sales of Nvidia chips to China will not affect the automaker's business.

 

Last week, Nvidia announced that the US would require the chipmaker to obtain a license for future exports of certain products to China to reduce the risk of their use by the Chinese military.

 

"We believe this will not affect our business operations", — William Lee, founder, chairman and CEO of Nio, said through the company's translator during a call on Wednesday. This is according to the StreetAccount transcript.

 

"We estimate that our computing power is sufficient for the development of autonomous driving technology in the aspect of AI training," Li said. "And we're working very closely with our partner Nvidia."

 

The Nvidia Drive Orin chip has become a core part of autonomous driving technology for Nio and other electric vehicle companies in China. Nvidia's online blog describes how the new Nio ES7 SUV is equipped with four such chips, including one that allows the car to learn based on the driver's individual preferences.

 

The new US restrictions target Nvidia's A100 and H100 products, which are part of the company's much larger data center business. These products are GPUs that can be used for artificial intelligence.

 

Li said on Wednesday that there are many companies in China that make artificial intelligence training chips, and that Nio is evaluating cooperation opportunities with various companies. But he said that US restrictions would not affect Nio's long-term strategy.

 

Last week, automaker Geely said it would not be affected by the new restrictions, as self-driving startups WeRide and Pony.ai did.

 

Earlier this week, Chinese financial news website Caixin reported that He Xiaopeng, chairman of electric vehicle startup Xpeng, said the restrictions would cause problems for learning autonomous driving algorithms on cloud computing platforms.

 

But he said the company has purchased enough high-tech products to meet demand in the coming years. Caixin quoted He's post on his personal WeChat account, which is similar to a private post on Facebook's news feed.

The U.S. dollar on Thursday retreated from a two-decade high against a basket of major currencies as investors awaited a speech by Federal Reserve Chairman Jerome Powell the next day in search of new clues about further monetary policy.

 

The dollar index, which measures the dollar against six major currencies, fell 0.15% to 108.47 but remained close to the highest since September 2002 at 109.29 reached in mid-July.

 

Investors had expected the Fed at its annual meeting in Jackson Hole, Wyoming, to double its commitment to suppress inflation.

 

Money markets have dampened expectations that the U.S. central bank could move to a slower pace of rate hikes following a chorus of Fed hawkish comments in recent weeks, and now the chances of another super-large 75 basis point rate hike next month are 60.5% versus a 39.5% chance of a half-point rate hike.

 

Expectations of FOMC Chairman Powell's hawkish message to Jackson Hole are likely to keep upward pressure on the U.S. dollar," Commonwealth Bank of Australia analyst Christina Clifton wrote in a client note.

 

"However, there is a risk that the speech will be considered insufficiently hawkish, and we will see some rollback of the US dollar."

 

The dollar retreated 0.25% to 136.775 yen, but remained near this week's one-month high of 137.705.

 

The euro rose 0.14% to $0.99825 after falling to a 20-year low of $0.99005 on Tuesday.

 

The single currency has been hit by concerns about economic growth as the region faces an energy crisis and investors are in tension before Russia halts gas supplies via the main Nord Stream 1 gas pipeline for three days from Wednesday for unscheduled maintenance.

 

Sterling rose 0.17% to $1.18105 after falling on Tuesday to its lowest level since March 2020 of $1.1718.

 

The Australian dollar rose 0.19% to $0.6920, rising from a more than one-month low of $0.6856 at the start of the week.

 

The New Zealand kiwi lagged behind its antipode counterpart, rising 0.06% to $0.6194, thwarted by data on declining retail sales. On Monday, it hit a one-month low of $0.6157.

See which companies made headlines before the call:

 

Six Flags (SIX) — Shares of the theme park operator fell 12.8 % in the premarket after its quarterly profit and revenue fell short of Wall Street's forecasts. The results of Six Flags, among other factors, were affected by a drop in attendance by 22%.

 

Canada Goose (GOOS) - the manufacturer of outerwear reported smaller-than-expected quarterly losses, and revenue exceeded analysts' forecasts. Canada Goose is the latest luxury retailer to see its high-end consumers maintain their spending levels. Shares added 2.4% in pre-market trading.

 

Warby Parker (WRBY). The glasses retailer reported smaller-than-expected quarterly losses, with sales beating estimates. The number of active customers increased by 8.7% compared to last year.

 

Utz Brands (UTZ) — Shares of the maker of salty snacks jumped 8.2% in the premarket after reporting quarterly profit and revenue that were better than expected, and also raises the sales forecast for the full year.

 

Cardinal Health (CAH) – Cardinal Health fell 1% in the premarket after reporting mixed quarters, with the pharmaceutical distributor's earnings beating Street's forecasts and revenue falling short of estimates. Cardinal Health also announced that CEO Mike Kaufmann will step down on Sept. 1, and CFO Jason Hollar will take his place. Expected quarterly revenue and announcing a December 8 launch date for an ad-supported version of its streaming service, Disney+. He also announced that he would raise the price of his ad-free service from $7.99 to $10.99 per month.

 

Sonos (SONO) earnings: Revenue was also well below Wall Street's forecasts as the company lowered its full-year forecast in the face of economic woes. The manufacturer of high-end speakers also announced the departure of CFO Brittany Bagley from September 1.

 

Bumble (BMBL) - Bumble shares fell 8.9% in pre-market trading after the dating service operator lowered its annual revenue forecast. Bumble faces stiff competition from rivals such as Match Group (MTCH), Tinder's parent company, and its dating app Badoo, popular in Western Europe, has been hit by the war in Ukraine.

 

Vacasa (VCSA) – Vacasa soared 24.7% in the premarket after a holiday rental provider raised its full-year forecast amid rising demand. Vacasa also reported an unexpected quarterly profit.

 

Vizio (VZIO) - Vizio added 2% in the premarket after the manufacturer of smart TVs and other consumer entertainment equipment reported an unexpected profit for the last quarter with average revenue. per user by 54 % more than a year earlier.

Markets were subdued again Tuesday as investors awaited the Federal Reserve's latest meeting and the release of quarterly earnings reports from major tech companies later this week.

 

The Federal Open Market Committee wraps up its two-day meeting Wednesday, and investors expect another 75 basis point interest rate hike, while tech giants Apple, Amazon, Microsoft and Alphabet will release their quarterly earnings reports this week.

 

U.S. stock futures were down slightly in morning trading, with Dow Jones Industrial Average futures down 0.38 percent and Nasdaq futures down 0.32 percent. S&P 500 futures traded 0.30 percent lower after a Walmart earnings warning sent stocks down 9.3 percent in over-the-counter trading.

 

Analysts said the low futures trading volume means investors should expect another quiet day for stocks.

 

"Yesterday was a dull day, and today probably will be too," said Michael Brown, head of market analysis at Caxton FX. "Take the opportunity to rest up before the fireworks begin on Wednesday."

 

Alphabet and Microsoft will be the first major tech giants to report their earnings, with second-quarter reports to be released after Tuesday's closing bell.

 

"We have Microsoft and Alphabet today after the bell, Meta tomorrow, and Apple and Amazon on Thursday," said Deutsche Bank managing director Jim Reed. "So there will be more than $7.5 trillion at stake in the next couple of days."

 

Global stock indexes were also mixed, with the MSCI World Index up 0.1 percent, but several key stock markets saw slight declines.

 

Europe's flagship Stoxx 600 index was up 0.04%, with the Paris CAC 40 and Frankfurt DAX 40 falling 0.15% and 0.55%, respectively. London's FTSE 100 index traded more strongly, rising 0.63%.

 

In Asia, the Shanghai Composite was up 0.83% and Hong Kong's Hang Seng was up 1.93%, but Tokyo's Nikkei 225 was down 0.24% at the close of trading.

 

Here's how the other major asset classes are behaving:

• Bond yields fell, with the 10-year U.S. Treasury note down 3.1 basis points to 2.79% and the 2-year U.S. Treasury note down 1.7 basis points to 3.02%.
• Oil prices rose after Russia cut gas supplies through the Nord Stream pipeline to Europe to about 20 percent of its full capacity. Brent crude rose 1.75% to just under $102 a barrel and WTI crude rose 1.72% to more than $98 a barrel.
• Cryptocurrencies fell after the U.S. Securities and Exchange Commission opened an investigation into the Coinbase exchange: bitcoin fell 4.3% to just over $21,000 and ethereum fell 7.6% to about $1,400.

 

The euro hit a 20-year low on Friday, licking its wounds at the end of its worst week in two months as investors braced for Europe to enter a recession while markets waited for U.S. employment data to set the next direction for the dollar.

 

The euro fell more than 2% this week on fears that gas shortages are looming in Europe and economic growth will suffer. It hit a two-decade low of $1.0144 overnight and is barely clinging to parity, buying $1,0185 for the last time.

 

The fall of the euro led to the fact that the US dollar index this week reached a two-decade high of 107.270, and in Asia the index was last slightly below this level and fell by 0.1% - 106.840.

 

"Europe is exposed to great risks related to energy dependence, the crisis of the cost of living for consumers and the risk of fragmentation. This means a depreciation of the euro / dollar, "Citi analysts say.

 

The Australian dollar rose 0.3% on Friday to $0.6850, down from a two-year low of $0.6762, thanks to an infrastructure stimulus program announced in China that traders hope will boost demand for the commodity.

 

Sterling also seems to have weathered a week of British political chaos relatively well. It was down 0.3% for the week but rebounded slightly overnight when Prime Minister Boris Johnson resigned, putting an end to uncertainty about his future.

 

The pound last traded for $1.2053 and was on track for its best week in more than two years thanks to a weakening euro.

 

The New Zealand dollar rose 0.3% to $0.6192 and looks set for a stable week. Growing concerns about the outlook for the global economy stabilized the fall of the Japanese yen as investors seek safety and it held at 135.94 per dollar.

 

While skyrocketing energy prices appear to be unsettling confidence and growth in Europe, investors are also concerned about the health of the U.S. economy, even as the latest data has been better than expected.

 

The next indicator will be data on employment in the non-agricultural sector of the US, which should be released at 12:30 GMT. Economists predict that about 268,000 jobs were created in June.

 

Higher rates could ease some fears of a recession, but are likely to raise rates for rate hikes and could lead to a rise in the dollar.

 

"More significant job growth will underpin expectations of an even more aggressive Fed policy," said Carol Cong, a strategist at Commonwealth Bank of Australia in Sydney.

 

Deutsche Bank strategist Alan Ruskin also said simply living up to expectations would be enough to encourage talk of "U.S. exceptionalism" in the face of a global energy shock.

 

This could keep the dollar high, "with euro/dollar parity being the most obvious target for a few days/weeks," he said. The dollar has also held out in emerging markets, causing several Asian currencies to fall to multi-year lows this week, with the Indian rupee hitting an all-time low.

 

Bitcoin, meanwhile, began to recover, rising in price over the week by almost 15% to $ 22,100.

Wells Fargo economists said Wednesday they expect the U.S. to fall into recession in 2023 after the Federal Reserve raised interest rates by the largest amount since 1994 in a bid to suppress inflation.

 

The Fed's actions caused a change in views on Wall Street regarding the prospects for US growth, with analysts of all countries saying that the risks of recession are increasing.

 

On Wednesday, the central bank raised interest rates by 75 basis points — far more than the traditional 25 basis point hike — to bring the target range of the federal funds rate to 1.5 to 1.75%.

 

Fed officials said that in the current state of affairs, they expect to raise rates to about 3.8% in 2023.

 

Wells Fargo said a sharp increase in interest rates that would push borrowing costs across the economy would likely trigger a "mild recession" in mid-2023.

 

The bank's chief economist, Jay Bryson, previously believed that the Fed would be able to curb inflation without a sharp slowdown in growth.

 

"In our view, the recession will be more or less equivalent in scale and duration to the recession of 1990-1991. That recession lasted two quarters, and the peak of the decline in real GDP from peak to peak was 
real GDP by 1.4," Bryson said in a note to clients on Wednesday.

 

Wells Fargo wasn't the only one who became more pessimistic about the U.S. economy on Wednesday.

 

Sima Shah, chief strategist at Principal Global Investors, said the Fed's updated economic forecasts indicated a recession could begin even if Chairman Jerome Powell told reporters that such a fate could still be avoided.

 

The Fed abandoned its "flawless disinflation" scenario, instead acknowledging that unemployment is likely to rise if they have any hope of lowering inflation," she said.

 

"And while a recession doesn't directly appear in their forecast, a 0.5% increase in the unemployment rate by the end of 2024 definitely indicates a recession."

 

The Fed's own "dot chart," which shows officials' views on where interest rates are headed, showed that borrowing costs are likely to fall to about 3.4% in 2024. This suggests that policymakers expect to have to cut rates again as the economy slows.

 

"Tougher and faster measures entail economic costs," said James Knightley, chief international economist at Dutch bank ING. "Rising recession risks mean that rate cuts will be on the agenda in the summer of 2023."

Oil prices fell after a report that Saudi Arabia is ready to increase crude oil production if Production in Russia drops significantly after European Union sanctions.

 

The Financial Times reported, citing sources, that Saudi Arabia is aware of the risk of supply shortages and that "it is not in its interest to lose control over oil prices."

 

Oil prices fell in the morning hours of trading in Asia. Futures for the international benchmark Brent crude oil fell by 2.12% to $113.82 per barrel. U.S. crude futures fell 2.18% at $112.75 a barrel.

 

EU leaders on Monday agreed to ban 90% of Russian oil by the end of the year as part of the sixth package of sanctions the bloc has imposed against Russia since its invasion of Ukraine. Initially, this led to an increase in oil prices.

 

Sources told the FT that Saudi Arabia, the de facto leader of OPEC, has yet to see a real shortage in oil markets. So far, it has ignored pressure from Washington to accelerate production increases as oil prices have risen sharply this year.

 

But that could change when economies around the world reopen amid a pandemic recovery, boosting demand for crude oil.

 

These include China, the world's largest oil importer, where major cities are beginning to ease restrictions as daily Covid cases decline.

 

"While not a direct promise, Saudi Arabia [seems] has thrown a bone to the West," Matt Simpson, a market analyst at Britain-based trading platform City Index, wrote in a post-news release note.

 

"This will be well received by Western leaders, given that inflation – and inflation expectations – remain at sky-high levels, and central banks are trying to raise rates, risking plunging their economies into recession," he added.

 

The FT report comes ahead of the monthly meeting of the OPEC+ alliance on Thursday, which includes Russia. Russia is the second largest exporter of crude oil in the world after Saudi Arabia.

 

At the same time, some members of OPEC+ are also considering the possibility of removing Russia from participating in the deal on oil production, reports The Wall Street Journal, citing unnamed OPEC delegates.

 

OPEC delegates are reportedly concerned about growing economic pressure on Russia and its ability to pump more oil to lower rising prices.

According to Yardeni Research, U.S. households now spend the equivalent of $5,000 a year on gasoline, up from $2,800 a year ago.

 

In March, the annual level of gasoline costs was $ 3,800, Yardeni noted. In the week of May 16, the national retail price of gasoline reached a record $4.59 per gallon, the firm said.

 

"No wonder the consumer sentiment index is so depressed. Not surprisingly, retail sales in April and May were surprisingly high," Yardeni said in a note.

 

According to Yardeni, consumers' inflation-adjusted incomes are barely growing, but they have accumulated a lot of savings, and they have begun to pay more on credit cards.

 

However, Yardeni says that it is not worth betting against American consumers: "When we are happy, we spend money. When we're depressed, we spend even more money!"

 

Retail sales data for April, released on Tuesday, was surprisingly strong. Year-on-year, retail sales for the month rose 8.2%.

 

Gasoline sales in April were actually down from March as prices temporarily fell before rising to a record high in May. According to the Commerce Department, gasoline spending in April rose nearly 37% from a year ago.

 

According to the AAA, a year ago the price of gasoline was $3.04 a gallon. This week, the average price rose above $4 a gallon in all 50 states, according to AAA data.

 

The national average price on Wednesday was $4.57 a gallon, according to the AAA website.

The dollar index weakened growth on Friday after hitting a new 20-year high, as traders weighed the recent sell-off in world markets caused by fears of a recession.

 

European stocks fell in the wake of the wall street crash.

 

The U.S. currency has strengthened on expectations that the Federal Reserve will tighten monetary policy faster than other countries to stem rapid inflation.

 

In April, 428,000 jobs were created in the U.S., which was slightly more than the 400,000 expected by the Dow Jones.

 

The dollar index, which tracks its performance against a basket of six major rivals, rose 0.5% in early European trading and hit a new 20-year high of 104.07.

 

However, it then lost ground in volatile trading and last fell 0.1% to 103.66. For a 1-week period, it has been growing for the fifth week in a row, an increase of 0.7%.

 

On Wednesday, the Fed raised rates by half a percentage point — the biggest jump in 22 years — but the dollar temporarily cooled on comments from Fed Chairman Jerome Powell that policymakers are not considering actively raising rates by 75 basis points in the future.

 

"Financial market conditions need to become tougher to change the central bank's view of inflation risks, so the U.S. dollar will remain on the path to strengthening for now," MUFG said in a note.

 

At the beginning of European trading, the euro lost to 0.5% against the dollar, but then changed course. The last time it changed slightly at $1.0545.

 

Sterling was trading at $1.2337 after earlier falling below $1.23 for the first time in almost two years, a day after the Bank of England issued a sharp warning that britain risked a double whammy of recession and inflation above 10%.

 

The Bank of England also joined the Fed in raising rates, raising them by a quarter of a percentage point to 1%.

 

The yen rose slightly against the dollar, 0.4% to 130.58 yen to the dollar.

The dollar was aiming for its seventh straight weekly gain against the yen on Friday and its best weekly gain against the Chinese yuan in more than two years, as rising U.S. yields boosted the dollar.

 

China is easing monetary policy and Japan is holding its government bond yields to zero, while Federal Reserve Chairman Jerome Powell said a 50 basis point rate hike could be considered at the next meeting in two weeks.

 

That announcement, while more or less in line with market expectations, sent the yield on five-year U.S. bonds above 3% for the first time since 2018, sparking a rebound in the euro.

 

The euro last bought $1.0837 and is not well above a two-year low, even as markets begin to assess higher rates - two-year yields in Germany hit an eight-year high overnight.

 

The yen was down 1.6% for the week and last traded at 128.35 per dollar, just above Wednesday's 20-year low of 129.43. The U.S. dollar index held above the 100 mark at 100.83.

 

The yuan broke through its 200-day moving average this week and hit a fresh seven-month low of 6.4830 in early session offshore trading. It last traded at 6.5004.

 

"The (swap) market is now pricing in a 146 basis point tightening over the next three Fed meetings," Commonwealth Bank of Australia analyst Carol Kong said.

 

"The dollar could get additional support from safe haven demand today if April's PMIs raise market concerns about the outlook for global growth," she added, referring to purchasing managers' index data due out in Europe and the U.S.

 

Growth worries have been holding back oil prices lately, and along with fears of economic damage from factory closures in China put pressure on commodity currencies overnight.

 

The Australian dollar fell 1 percent on Thursday and was hanging around its 50-day moving average at $0.7308 on Friday. The New Zealand dollar also fell 1 percent overnight and was down to $0.6685 on Friday.

 

Japanese Finance Minister Shunichi Suzuki said Friday that the recent fall in the yen was "sharp," and his comment seemed to halt the yen's losses, although he added that he did not express concern about it in a meeting with U.S. Treasury Secretary Janet Yellen.

 

Japan's core consumer prices rose at the fastest pace in more than two years in March, raising the risk that policymakers may try to shore up the currency to ease pressure on households from rising energy and imported food prices.

 

The pound was down to $1.2909.

Gold prices remained stable after the publication on Wednesday of the minutes of the March meeting of the US Federal Reserve, as the attractiveness of the metal as a safe haven and hedge for inflation leveled the expected increase in the rate of the US central bank by 50 basis points.

 

By 3:08 p.m. ET, spot gold had changed little at $1,923.50 an ounce, while U.S. gold futures were down 0.2% at $1,923.10.

 

"You'll see gold trade a little lower between today and the close of trading, but there wasn't much surprise in those (Fed's) minutes," said Bob Haberkorn, senior market strategist at RJO Futures, adding that the downside opportunities for gold are limited.

 

"Markets were expecting a half-point rate hike."

 

Fed officials noted that one or more 50 bp rate hikes in the target range may be appropriate for future meetings, the next of which will be held in May, especially if inflationary pressures remain elevated or intensify, according to minutes of the March 15-16 meeting.

 

The Fed raised rates by 25 basis points after the March meeting, and the minutes showed that the economic consequences of Russia's invasion of Ukraine in late February did not allow for a 50 basis point hike.

 

Rising U.S. interest rates and rising yields increase the opportunity cost of owning bullion, which is also used as a hedge against rising inflation.

 

However, gold prices could continue to rise over the next two quarters as the Fed fails to raise rates quickly enough to combat high inflation, Haberkorn added.

 

The dollar jumped to a nearly two-year high, which reduced the attractiveness of gold.

 

"There are still a number of things that can trigger a new rally in gold. Inflation continues to rise above current expectations, negotiations between Ukraine and Russia have failed or recessioned," said Craig Earlam, senior market analyst at OANDA.

 

Among other precious metals, silver rose 0.4% to $24.40 an ounce, platinum fell 1.5% to $953.88, and palladium fell 2.2% to $2,189.43.