EBC Markets Briefing | Yen edges down as forex intervention risks linger

The yen remained weak on Thursday after a key inflation reading showed prices moderating across a range of goods and services in the US, possibly taking the urgency out of an imminent interest rate hike.

According to Goldman Sachs, Japan still has about $200 billion to launch a few more massive yen-buying operations similar to last month's record intervention, thanks in part to an available Fed facility.

Those gains following the move are now fading. The currency slipped to near the key 160 level, but options pricing shows traders are still bracing for another sharp yen surge.

Markets now price a 65% chance of a 25-bp BOJ hike in September and about 40 bps of tightening by year-end. The country's PPI eased slightly to 7.2% year on year in July, missing expectations.

While the US and Iran continue to make contrarian claims, data from trade intelligence firm Kpler showed that ship traffic through the Strait of Hormuz waterway is near a 3-month low.

Iran has laid out heavy demands to reopen the waterway, calling for an end to the US blockade, lifted sanctions, troop withdrawals, and war reparations. The Trump administration can hardly accept the conditions.

EBC Financial Group analyst says that the 200 SMA acted as dynamic resistance near 158 per dollar before the recent retreat. If the price holds above the 159.4 per dollar, the yen may face another leg lower.

Asset Recap

As of market close on 12 August, among EBC major products, Oracle shares led gains, driven by planned job cuts aimed at improving efficiency and managing expenses amid AI expansion.

Uber Freight is investigating a data security incident involving unauthorized access to a portion ​of its systems and repositories, despite that there has been "no impact to Uber Freight's business operations.

South Korean stocks entered into a technical bull market as a global revival in the AI trade fuels a sharp recovery after last month's historic sell-off. Their Japanese peers followed suite.

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EBC Financial Group Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC Global Financial Collaboration or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.