The market tension remains high. Following yesterday’s panic with yen appreciation and stock decline, today sees rapid movements towards yen depreciation and stock gains. However, the market remains unstable, and volatile conditions may continue for a while.
Key Points:
Tri-party Meeting: A meeting involving the Ministry of Finance, Financial Services Agency, and the Bank of Japan is expected to stabilize market sentiment. With the Bank of Japan’s additional rate hike speculated to be a factor in yen appreciation, a convincing explanation from Governor Ueda will be crucial.
Impact of U.S. Stocks: The sharp decline in U.S. semiconductor company stocks has triggered a global stock market decline, highlighting the need for improved U.S. economic indicators. The recent improvement in the U.S. ISM Non-Manufacturing Index, which surpassed the economic threshold of 50, is a positive sign.
Market Anxiety: The VIX Index (Fear Index) surged to around 65% yesterday before dropping to about 38%, but it remains high. The one-week volatility of USD/JPY has also increased, indicating persistent market anxiety.
Economic Indicators’ Impact: Today’s economic indicators, such as the Eurozone retail sales, Canada’s international merchandise trade, and the U.S. trade balance, are expected to have a limited impact on easing market fears. With few major U.S. economic indicators being released this week, attention will be on Thursday’s initial jobless claims.
Other Considerations:
Amid market instability, pay attention to interviews, social media statements, and blog reports.
Watch for the U.S. 3-year bond auction, and earnings reports from Uber, Airbnb, and Caterpillar.
Iran plans to seek understanding for its retaliation at the Organization of Islamic Cooperation on the 7th, with a potential attack to follow. This could lead to a resurgence in market risk aversion.
