EBC Markets Briefing | Yen languishes as Tokyo poised for "lightening war"

The yen dipped on Monday after BOJ officials repeatedly note that a weak yen fuels inflation more than before because businesses now rapidly pass rising import costs to consumers.

Tokyo Shoko Research showed that bankruptcies linked to the weak yen totalled 45 in the first half of the year, increasing 32.3% from the same period a year earlier.

Pressure on the government bonds is creating visible tension within the administration. This prompted an economic advisor to the dovish PM to advocate for steady, moderate interest rate increases by the central bank.

The 10-year yield hit a 30-year high on Thursday, driven by concerns over ​inflation from renewed tensions in the Middle East and fiscal health. The forex intervention could be more abrupt next time.

Advance signaling from MOF officials regarding their move provided market participants ample opportunity to mitigate risk. As a result, traders minimized losses by unwinding their short yen exposure.

Any future market intervention will happen without warning. This will spike market uncertainty and make shorting the yen far riskier, indicating that authorities see a clear tactical advantage in staying unpredictable.

EBC Financial Group analyst says, the yen has transitioned into a consolidation at the bottom. If the price can break and close above 162.48 per dollar, the downtrend is likely to resume toward new multi-year lows.

Asset recap

As of market close on 10 July, among EBC major products, Meta Platforms shares led gains, extending gains after the social media and cloud computing colossus disclosed some exiting developments.

Netflix is considering the introduction of live television channels and expanded streaming bundles as executives increasingly focus on signs of weakening subscriber engagement, WSJ reported.

Chinese stocks recently faced a sharp sell-off driven by semiconductor and tech lockup expiries, but analysts from local institution suggest the correction may be nearing its floor rather than entering a historic trough.

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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.