We believe that the Japanese authorities will try, at least verbally, to intervene in the markets and try to calm the mood, try not to let up [yen] Depreciation goes completely out of control.
Chang Wei Liang
Foreign Exchange and Credit Strategist, DBS Bank
yen clock
Investors watched the Japanese yen trade at 125.21 per dollar after weakening against the greenback from below 125 yesterday.
“Based on what we’ve seen so far, the … dollar-yen surge from 115 to 125 is a very sharp rise in a very short period of time,” Chang Wei Liang, FX and credit strategist at DBS Bank, told CNBC’s “Street Signs Asia” on Tuesday.
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“We think that the Japanese authorities will try, at least verbally, to intervene in the markets and try to calm the mood, try not to let the pace of depreciation get completely out of control,” Chang said.
In early March, the yen was trading below 115 while the greenback fell sharply from those levels. The Japanese currency is currently nearing a two-decade low, according to National Australia Bank’s Tapas Strickland.
Hot US inflation
In the US, the Dow Jones Industrial Average lost 413.04 points to 34,308.08 overnight, while the S&P 500 fell 1.69% to 4,412.53. The tech-heavy Nasdaq Composite lagged, falling 2.18% to 13,411.96.
The US CPI for March is due to be released during ET on Tuesday, with the White House warning it expects the report to show “extraordinarily high” inflation. Economists polled by Dow Jones expect the data to show an 8.4% annual price increase, the highest since December 1981.
“Very high US inflation will keep alive market expectations of aggressive FOMC tightening, in our view,” said Carol Kong, senior associate for monetary strategy and international economics at the Commonwealth Bank of Australia.
“We expect the FOMC to respond to strong underlying inflation by raising the fund rate by 50 basis points in May and June,” Kong said.
Oil and Currencies
The US Dollar Index, which tracks the greenback against a basket of its peers, came in at 100.008, continuing to hold above the 100 level.
The Australian dollar was at $0.7429, still lower than yesterday’s $0.744.
Oil prices were higher in the afternoon of Asian session, with international benchmark Brent crude futures up 1.67% to $100.12 a barrel. US crude futures were up 1.77% to $95.96 a barrel.
— CNBC’s Evelyn Cheng contributed to this report.