GGMA Markets Briefing: Yen Surges to Six-Month High as Oil Nears $100 and Chipmakers Lift Asia
The yen climbed to its strongest level since February, and oil closed in on $100 a barrel on Tuesday, while Korean chipmakers carried Asian equities into the return of US markets from Labour Day (BBG). Bloomberg reports that the break through a key dollar-yen level triggered large stop-loss orders and forced options dealers to sell dollars, with expectations for a Bank of Japan rate rise next week providing the fundamental support and the intervention push from Treasury Secretary Bessent and Finance Minister Katayama now "taking on a life of its own" (BBG). "We are likely to be in some sort of period of digestion because we are going through a pretty meaningful adjustment in terms of central bank policy around the world," Anastasia Amoroso, chief investment strategist at Partners Group, told Bloomberg Television (BBG).
In stocks, the Nikkei fell 0.24% to 66,330 as the stronger yen weighed on exporters, while Seoul rallied behind SK Hynix and Samsung Electronics and the Hang Seng slipped 0.07% to 25,319 (BBG). The CSI 300 rose 0.13% to 4,568 after China’s August trade data showed exports growing in line with forecasts on chips and electric vehicles, and the ASX 200 fell 0.89% to 8,917 as consumer sentiment slumped and a report that China's state buyer told steel mills to hold off on Rio Tinto's ore hit the miners (CNBC) (Com) (BBG). Nasdaq futures rose 0.37% to 29,674.25, S&P 500 futures were little changed at 7,715.5 and Dow futures fell 0.67% to 53,083. JPMorgan strategists led by Mislav Matejka wrote that with corporate profits on an uptrend "one should continue using the dips to add" (BBG). In Europe, Euro Stoxx 50 futures were flat at 6,405 and FTSE futures eased 0.10% to 10,822.5 ahead of a cash open that will weigh Chancellor Healey's first big speech and the fallout from Sunday's German state election (BBG) (Reuters).
Regarding the Bank of Japan, the case for next week's rate rise hardened overnight: nominal wages rose 4.7% in July against 3.8% expected, the largest gain since 1997, and second-quarter growth was revised up to 1.4% annualised (BBG). Bloomberg reports the Bank is leaning toward a quarter-point move while keeping open a faster pace afterwards, with board member Takata having raised the possibility of an outsized or back-to-back move, and Bloomberg Economics expects a hike but doubts an October follow-up (BBG) (BBG). Katayama said Japan's currency stance is unchanged since the joint intervention and that she remains in close contact with Bessent (BBG). Regarding the RBA, Assistant Governor Sarah Hunter told a property summit that the Board has no tolerance for inflation staying above target for an extended period and "may well have to raise interest rates" if inflation runs stronger than forecast, while cautioning that the July monthly CPI is volatile, and Westpac's Luci Ellis moved the bank's call to a November rise on resilient household incomes and the data-centre boom (LS). Regarding the ECB, Bundesbank President Nagel and Ireland's Makhlouf have signalled that Thursday's hike will surprise nobody, and the Governing Council is in its quiet period (LS). For the Bank of Japan, markets price a 95% probability of a 25 basis point rate hike on 18 September, and 46 basis points cumulatively by December. For the RBA, markets price a 66% probability of a rate hike in September, 17 basis points of tightening, and 32 basis points cumulatively by December. For the ECB, markets price a 97% probability of a rate hike at Thursday's meeting, and 47 basis points cumulatively by December. For the Fed, markets price a 59% probability of a rate hike in September, 15 basis points of tightening, and 34 basis points cumulatively by December. For the Bank of England, markets price an 8% probability of a rate hike in September, 2 basis points of tightening, and 30 basis points cumulatively by December.
In currencies, the yen strengthened 0.56% to 153.49 per dollar, taking its September gain past 4% as the best performer in the G10, and Bloomberg reports two-week implied volatility in dollar-yen is the highest since May 2025 as yen short covering spreads across the euro, sterling and franc crosses (BBG).
NAB's Rodrigo Catril says the break opens the door to a test of the year's strongest levels, SMBC Nikko's Rinto Maruyama sees a further unwind of yen carry trades if the next support gives way, and Aozora Bank's Akira Moroga cautions that the wide US-Japan rate gap leaves scope for a rebound once positions adjust (BBG). The health minister who oversees the GPIF said the pension fund is still considering whether an allocation review is needed, keeping the repatriation theme alive (BBG). The dollar index fell 0.34% to 98.839, the euro held at 1.1626, the New Zealand dollar eased 0.31% to 0.5861 and the Australian dollar was steady at 0.7215 despite the weak sentiment data, while the won firmed 0.21% to 1,342.46 per dollar on the chip rally and China's trade data showing imports from Korea more than doubling (CNBC). The Canadian dollar edged up to 1.3797 as Ottawa's counter-tariffs took effect (BBG). Sterling held at 1.3539 into Healey's budget run-in, with Bloomberg reporting that hedge fund founder Chris Rokos is moving his residency to Greece, the latest top taxpayer to leave the UK (BBG).
In government bonds, the Japanese ten-year yield fell 3.7 basis points to 2.891% and the two-year held at 1.849% as the yen's surge eased pressure on the front end, and the five-year auction drew weaker demand than last time with a wider tail, which Bloomberg reports left JGB futures briefly lower and traders relieved the result was no worse (BBG). The Treasury ten-year yield was steady at 4.78% and the two-year at 4.36% with US cash trading resuming after the holiday and a three-year auction due at 19:00 CET, and the Australian ten-year eased 1.35 basis points to 5.18% after the soft sentiment and business surveys. Gilts open to Healey's promise of fiscal discipline with a buffer, no tax answers before the 28 October budget and Bloomberg's estimate that the summer bond sell-off erased about half the fiscal headroom (BBG). Bunds face the AfD's near-44% in Saxony-Anhalt, 39 of 83 seats, which Chancellor Merz said shook his party to its foundations while he ruled out cooperation and resignation (Reuters).
In commodities, Brent rose 1.13% to $98.10 and WTI 2.16% to $93.46 as traders awaited details of an Iranian accord with Oman to manage Hormuz shipping, which Tehran calls imminent, after the weekend's tanker and warship strikes (BBG) (Reuters). Reuters reports parliament speaker Qalibaf warned that Gulf energy infrastructure including US oil and gas interests is "sprawling, accessible, and exposed", Iran will announce a restricted zone starting at the US blockade line with a new corridor, and shipping data show an average of just 10 commodity vessels a day transited the strait over the past 10 days, the lowest since May (Reuters). Shipping data showed Strait of Hormuz traffic slowing at the start of the week as tensions escalated, with a Qatar LNG ship nearing Hormuz in an attempt to exit the strait (LS). Bloomberg reports Goldman Sachs modestly raised its oil forecasts on the assumption that disruption persists into 2027, and Vitol's Russell Hardy said flows through Hormuz remain roughly 10 million barrels a day while product markets flash tightness (BBG). The Wall Street Journal reports Iran's oil dollars are drying up: no Iranian crude has crossed the US blockade since mid-July, floating Iranian stocks have fallen to about 29 million barrels and could run out by mid-October, and the rial has lost almost 15% since August, with official inflation above 80% (WSJ). Copper rose 1.39% to a record for a second session as tariff-driven shipments to the US drain exchange stocks and Chile's exports fell to a one-year low, wheat jumped after the US-Russia talks on Ukraine failed, gold rose 0.49% to $4,425.71 on the softer dollar, and Bitcoin fell 0.67% to 78,692.31 (BBG) (BBG) (BBG) (BBG).
In geopolitics, Canada imposed tariffs of 15% to 50% on hundreds of US products from midnight New York time, raising the levy on US steel to 50%, after talks collapsed in August, and Bloomberg reports no new meetings are scheduled while President Trump threatened to bar Bombardier jets and called Canada's currency imbalance unacceptable (BBG). China's state iron-ore buyer told steel mills to hold off on Rio Tinto's Pilbara Blend as contract talks reach a critical stage, repeating the pattern that ended in more yuan pricing for BHP (BBG). Jaguar Land Rover will cut thousands of jobs, Anthropic walked away from the Decart AI purchase and Uber hired banks for a debut euro bond (BBG).
Data and the day ahead: Japan's nominal cash earnings rose 4.7% in July against 3.8% expected and 4.0% previously, the largest rise since 1997, and second-quarter GDP was revised up to 1.4% annualised from 1.1% against 1.8% expected, with the current account back to a 2,988.9 billion yen surplus (BBG).
China's August exports rose 25.0% against 25.9% expected and imports 28.2% against 31.0%, lifting the surplus to $119.09 billion against $119.10 billion expected, with shipments to the US growing fastest (CNBC). Australia's Westpac consumer sentiment fell to 84.4 from 88.9 on petrol prices and rate-rise fears, and NAB business confidence slipped to -8 from -7 with conditions at -1 from +4 (Com). UK BRC like-for-like sales slowed to 0.5% from 1.0%, a four-month low as the heatwave boost faded (Reuters). Still to come: US NFIB small business optimism at 12:00 CET, the New York Fed's one-year inflation expectations at 17:00 CET, the three-year note auction at 19:00 CET and consumer credit at 21:00 CET. RBA Deputy Governor Hauser gives a television interview at 11:30 CET, Bank of England Governor Bailey, Deputy Governor Ramsden and MPC members Greene and Taylor testify to the Treasury Committee at 15:15 CET, and ECB board member Elderson holds a fireside chat in Berlin at 17:00 CET inside the quiet period. The Fed is in its blackout, the ECB decides on Thursday at 14:15 CET, US PPI lands Thursday and Friday's US CPI at 14:30 CET is the last inflation print before the Fed's 16 September meeting. Oracle and Adobe report on Thursday as the next read on AI infrastructure spending (BBG).
Time Stamp: 8 September 2026, 07:40 CET