Are the Japanese authorities ready to intervene to support the fast-weakening Yen?

USD/JPY

The dollar rose to a near six-month high yesterday as higher US yields gave an excellent reason to buy. In Japan, yields continue to scrape along the bottom, part of the policy of the Japanese government to avoid steering the economy back into its multi-decade policy of deflation and poor growth.

Masato Kanda, Japan's vice minister of finance for international affairs and a central figure in the country's efforts to stem the sharp decline of the yen since last year, said overnight the Japanese Government "won't rule out any options if speculative moves persist. Japan intervened in currency markets last year in September when the dollar rose past $145 yen and again in October when USD/JPY hit $151.

The Australian economy overview

The Australian economy expanded by 0.4% quarter-on-quarter, more than the 0.3% expected. Q1 gross domestic product (GDP) was also upwardly revised to 0.4%. Growth was driven by exports and investment, while household consumption, which used to be the engine of growth, remained subdued with just a 0.1% gain in the quarter. The Australian dollar remained near a 10-month low against the dollar in the wake of yesterday's announcement that the Reserve Bank of Australia (RBA) had decided to keep rates on hold.

The Bank of Canada

Later today, the US trade deficit is expected to widen to $68 billion in July, after a deficit of $65.5 billion in June, and the Non-Manufacturing Index ISM services Purchasing Managers' Index (PM) is expected to be 52.5 in August, marginally down from the previous month.

At 3pm, Bank of Canada interest rate decision Economists think Tiff Macklem will keep the Bank of Canada (BOC) overnight rate at 5%. Last Friday, the Canadian economy missed expectations. The GDP growth rate was flat quarter on quarter. The economists expected a 0.3% rise. And since last Friday, USD/CAD has been declining, hitting a five-month low.

WHSmith

Elsewhere on the equity market, Smiths's revenue rose 28% year over year, driven by travel. Smiths continued to benefit from the recovery in passenger numbers across all key travel markets, up 42%. Halfords total revenue rose 14.1%, with auto centres up 34.6% and retail up 3.7%. Barratt Developments warns of difficult trading conditions over the coming months after the finacial year (FY) pre-tax profit fell to £884.3 million.

Brent and WTI oil

Oil futures jumped Tuesday afternoon to near 10-month highs for both Brent and WTI after Saudi Arabia and Russia said they would extend voluntary oil cuts to the end of the year. Saudi Arabia will extend its voluntary oil output cut of 1 million barrels per day for another three months until the end of December. 2023.

The U.S. and Western allies have urged OPEC+ to raise output to secure lower energy costs and help the global economy. This is also a blow on a political level, as the voluntary curbs allow the Kremlin to collect more revenues to fund its war in Ukraine.