Latest News

Marketmind: Attention intervention


Marketmind: Attention intervention By Reuters

Breaking News


Economy 2 minutes ago (Nov 07, 2022 21:15)

© Reuters. Japanese 1000-yen banknotes and Chinese 100-yuan banknotes are seen in a picture illustration, in Beijing, China, January 21, 2016. REUTERS/Jason Lee

By Jamie McGeever

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.

Figures from Beijing on Monday showed that China’s FX reserves unexpectedly rose in October, but there are unlikely to be similar surprises in Japan’s numbers due early on Tuesday.

They will almost certainly show a decline in official reserves, with investors hoping the data sheds light on exactly where Tokyo’s record $42.8 billion yen-buying currency market intervention last month came from.

China’s official stash rose $23.47 billion last month to $3.052 trillion – analysts had expected a fall to $3.018 trillion – while Japan held $1.24 trillion at the end of September.

China’s increase may be down to the euro’s rise of almost 1% against the dollar last month. A fairly large chunk of China’s FX reserves are thought to be in euro-denominated assets, unlike Japan’s, which are overwhelmingly invested in dollar assets.

Japan’s Ministry of Finance spent $42.8 billion last month to prop up the yen. This followed almost $20 billion of intervention in September.

China and Japan are the world’s top two FX reserves holders, and how they manage their $4 trillion of reserves has huge ripple effects for world markets, especially U.S. Treasuries.

If either or both sell Treasuries outright to support their exchange rates, U.S. yields could spike up, tightening U.S. and global financial conditions. There are already growing concerns surrounding U.S. bond market liquidity without two of the world’s largest holders of Treasuries actively selling.

Around 10% of Japan’s reserves are held as deposits parked with foreign official institutions and can be readily tapped for dollar-selling intervention. Maybe Tokyo dipped into this pool of funding before directly selling Treasuries.

Japan’s reserves fell a record $54 billion in September and in percentage terms, the 4.2% decline was the biggest since 1998. That was in large part due to valuation effects though – some form of dollar asset sales will figure more prominently in October’s report.

Three key developments that could provide more direction to markets on Tuesday:

Japan household spending (September)

Australia consumer sentiment (November)

India trade balance (October)

Marketmind: Attention intervention

UK watchdog says regulating pension fund consultants would contain risks betterBy Reuters – Nov 07, 2022

By Huw Jones LONDON (Reuters) -Regulating consultants who advise pension funds would ensure greater focus on managing risks that can emerge from the sector, such as the recent…

Euro, sterling bounce, dollar drops as investors cash inBy Reuters – Nov 07, 2022

By Hannah Lang WASHINGTON (Reuters) – Euro and sterling rose against the safe-haven dollar on Monday, supported by a risk-on sentiment across markets as investors digested…

Hungary government could decide on new caps on food prices within daysBy Reuters – Nov 07, 2022

BUDAPEST (Reuters) -Hungary’s government could decide on fresh price caps on foodstuffs within days to curb inflation, which could peak around 25% by the end of the year, Minister…

Our Apps

Terms And Conditions
Privacy Policy
Risk Warning

© 2007-2022 Fusion Media Limited. All Rights Reserved.

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

Crypto: Tensions rise between crypto exchanges Binance and FTX. What it means for the market.

Previous article

New Swedish government to cut fuel taxes, boost defence, police in budget

Next article

You may also like


Leave a reply

Your email address will not be published. Required fields are marked *

More in Latest News