Yen on intervention watch, Asia shares creep higher

The yen languished near its weakest in decades yesterday though the threat of intervention from Japanese authorities prevented traders from pushing the currency to a new low, while Asian stocks rose ahead of a key US inflation report.

Markets were largely rangebound ahead of today's much-anticipated US core personal consumption expenditures (PCE) price index data, the Federal Reserve's preferred measure of inflation. Few markets will be open to assess and respond to the new data, however, given the long Easter weekend in many countries.

Heightened focus was also on the yen, which was last little changed at 151.35 per dollar, having slid to a 34-year low of 151.975 in the previous session.

Japan's three main monetary authorities held an emergency meeting on Wednesday to discuss the weak yen, and suggested they were ready to intervene in the market to stop what they described as disorderly and speculative moves in the currency.

That came after officials ramped up verbal warnings to stem the yen's fall, with Finance Minister Shunichi Suzuki saying "decisive steps" will be taken against excessive currency moves.

Japanese authorities last intervened to support the yen in 2022, when they also used phrases such as "deeply concerned" and pledged to take "decisive steps" prior to intervention.

"Contrary to popular belief of 152 as the line in the sand, I think it's more of the magnitude of the move that may matter," said Christopher Wong, a currency strategist at OCBC.

"There is also a limit to how far verbal intervention can go. Nonetheless, the actual intervention risk is still high, if not higher."

The sliding yen has been a boon for Japan's Nikkei, which is up about 3 per cent for the month thus far. It closed more than 1 per cent lower.

In China, the yuan , which has similarly come under close scrutiny as it continues to struggle on the weaker side of the key 7.2 per level, steadied at 7.2268. It drew support from a strong fix by the People's Bank of China yesterday, as Beijing remains vigilant to any sharp sell-off in the currency.

The central bank set the midpoint rate , around which the yuan is allowed to trade in a 2 per cent band, 1,311 pips stronger than a Reuters' estimate, the widest gap since November 2023.

Chinese stocks also reversed losses from the previous day, buoyed by a firmer yuan and expectations that Beijing will take more aggressive measures to stimulate the economy.

The blue-chip CSI300 index and Shanghai Composite index each rose roughly 0.9 per cent, while Hong Kong's Hang Seng Index gained 1.45 per cent.

All that lifted MSCI'S broadest index of Asia-pacific shares outside Japan up 0.6 per cent.

S&P 500 futures and Nasdaq futures were trading little changed, while EUROSTOXX 50 futures added 0.32 per cent. FTSE futures gained 0.46 per cent.

Dollar power

In currencies, the dollar was on the front foot, helped in part by comments from Fed Governor Christopher Waller, who said late on Wednesday there is no rush to ease interest rates.

While a more than 50 per cent chance of a first Fed cut in June continues to be priced in, traders are placing greater bets for similar moves by the European Central Bank and the Bank of England that same month.

Sweden's central bank on Wednesday signalled there was a good chance of a series of rate cuts starting in May if inflation continued to drop towards its 2 per cent target.

Against the greenback, the euro fell 0.06 per cent to US$1.08215, and sterling eased 0.08 per cent to $1.26305.

The New Zealand dollar fell to its weakest level in more than four months to $0.5981.

"(The dollar) is still being swayed by the relative hawkishness of the Fed, taking all 19 policymakers together, and other central banks, who have tilted even more toward dovish in their tone recently," said Thierry Wizman, global FX and rates strategist at Macquarie.

The renewed dollar strength halted a blistering rally in gold that sent it to a record peak last week. The yellow metal last gained 0.1 per cent to $2,196.69 an ounce .

Oil prices edged up, with Brent gaining 39 cents to $86.48 a barrel, while US crude rose 50 cents to $81.85 per barrel.