According to Bank of America Securities’ recent survey, there’s a likelihood of further weakness in the Japanese yen. This sentiment contrasts with the consistently bullish yen bias observed since mid-2022. Despite Japanese authorities spending nearly $60 billion to bolster the yen, it has returned to trading at ¥155.83 against the dollar. Investors, reacting to USDJPY breaching new highs in April, have shifted to the largest JPY short position since 2022, displaying skepticism about Japan’s FX intervention effectiveness. Most fund managers expect USDJPY to retest ¥160, indicating a lack of anticipation for a reversal to ¥150. However, the sudden shift in sentiment towards JPY suggests caution for short positions in the near term, according to the bank.   Published on 17/05/2024 By Michael S.

The recent confrontation between Israel and Iran has had a significant impact on global financial markets and investments. Stock markets in Tokyo, Seoul, and Taipei dropped by more than 3%. Hong Kong and Sydney saw declines of over 1%, while Shanghai, Singapore, Wellington, and Jakarta also entered negative territory. The yen strengthened against the dollar, gold prices rose by over 1%, and WTI and Brent oil prices surged by more than 3% due to concerns over Middle Eastern oil supplies. Investors and international financial markets need to closely monitor and be cautious about the developments in this region.

Gold surged to an all-time high as the second quarter began, continuing its upward trajectory fueled by the Federal Reserve’s indication of potential rate cuts and escalating geopolitical conflicts. The price of bullion soared to a peak of US$2,260 per ounce on Monday morning, marking a 1.3% increase from Thursday’s closing price, following a series of record highs in recent trading sessions.

Japanese government bond yields increased on reports suggesting the Bank of Japan (BOJ) might exit negative interest rates. The benchmark 10-year JGB yield reached a one-month high at 0.760%. BOJ policymakers are reportedly considering ending negative rates and revising stimulus programs. The BOJ might replace its bond yield control (YCC) with a new quantitative framework. Big Japanese companies are expected to offer significant pay hikes, influencing the timing of BOJ’s exit. Japan’s economy avoided a technical recession, supporting an earlier exit. Market expectations for ending negative rates in March increased after BOJ officials’ comments on inflation targets. The 20-year and 30-year JGB yields also rose to one-month highs

The Singapore labor market is showing signs of slowing down. Total employment grew at a slower rate, and job vacancies dipped for the fourth straight quarter, according to the Ministry of Manpower labor market report for the first quarter of 2023. Retrenchments rose to 3,820, the highest in nine months, with sectors such as electronics manufacturing and financial services being the hardest hit. 70 percent of retrenched Singapore citizens and permanent residents managed to find a new job within six months. The city-state’s job market is likely to toughen further owing to economic uncertainty and global headwinds.

Debt limit optimism and decent data are nibbling away at the pricing of Fed rate cuts and dollar shorts are feeling the squeeze. It’s “just a correction” but it’s painful all the same. Joe Biden, the US President, called the bipartisan offer from House Speaker Joseph McCarthy “unacceptable.” The risk that the US government fails to make its debt payments by June 1 grows The first real US government bond payment default risk falls on June 6th. Without a debt ceiling resolution, the US government could place the global financial system in ‘shock’ as soon as June 6th. If not before.