After the Bank of Japan’s Discussions on Yen Rate Increase, the Currency Faces a Decline and Stock Recovery Continues
New York / London, August 7 (Reuters) – Global stock indices rose on Wednesday along with U.S. economic data, while the dollar strengthened against the yen following cautious remarks from the Bank of Japan.
Shinichi Uchida, Deputy Governor of the Bank of Japan, stated that the central bank will not raise interest rates amid unstable financial markets, which could lead to a decline in the yen. However, in the stock market (Nikkei 225), a new record was set as it rose 1% following a 10% increase on Tuesday, indicating a greater appetite for risk.
Stocks were supported after the Federal Reserve announced that it might start cutting rates in September, as the interest rate on the most popular U.S. mortgage fell to its lowest level in 15 months last week. The Mortgage Bankers Association also reported on Wednesday that refinancing applications have reached their highest level in two years.
Jane Goldman, Chief Investment Officer at C T R A, mentioned that the Bank of Japan’s statements, coupled with Tuesday’s risk increase and Wednesday’s data, are positive signs for consumers.
She said, “Now you are optimistic about consumer spending, and the economy might not be as bad as you feared.” She also added that people are able to refinance their mortgages.
Following the Bank of Japan’s remarks about the price increase, the yen declined among currencies, reducing investor concerns as they feared that further appreciation of the Japanese currency could destabilize global markets again.
The U.S. Dollar Index, which measures the value of the dollar against a basket of currencies including the yen and the euro, rose by 0.15% to 103.13.
Against the yen, the dollar increased by 2.22% to 147.51, while the euro rose by 0.03% to 1.0933 dollars.
The yield on 2-year Treasury notes, which typically moves with interest rate expectations, increased by 4.7 basis points to 4.0323% from 3.985%. The yield on 30-year Treasury bonds rose by 6 basis points to 4.2374% from 4.177%.
Despite concerns that escalating conflicts in the Middle East could harm oil production, oil prices increased even amid worries about weak crude oil demand.
U.S. crude oil rose by 3.21% to $75.55 per barrel, and Brent crude reached $78.62 per barrel, up 2.8% on the day.
In precious metals, spot gold prices increased by 0.43% to $2,399.70 per ounce. U.S. gold futures rose by 0.47% to $2,400.40 per ounce.
Other useful articles:
Immigration to Canada + Methods, Requirements, and Costs
Trump’s plan to create a national Bitcoin reserve for the U.S.
Japan seeking to calm market tensions following stock price fluctuations
