Asian equities could experience choppy trading due to a lack of clear drivers for decisive price action. Traders are currently analysing the impact of volatile trading in the U.S. stock markets, spurred by hawkish comments from Federal Reserve officials and a mix of corporate earnings reports. Federal Reserve Vice Chair Jefferson and Chair Jerome Powell have withdrawn earlier statements about potential rate cuts. Powell specifically pointed out that recent data has not shown progress on inflation this year, reducing confidence in rate cuts and likely maintaining high U.S. Treasury yields, and a strong USD as markets adjust expectations.
In the foreign exchange market, the USD/JPY pair displayed significant volatility during the New York morning, possibly due to suspected intervention by the Bank of Japan following a brief “flash crash.” The currency pair quickly rebounded after a sharp dip. Traders are advised to monitor this pair closely due to its susceptibility to sudden shifts and heavy buying pressure.
In geopolitical developments, traders are attentively monitoring the potential for a counter-attack by Israel against Iran. Despite indications from Israeli media that there is no immediate rush to respond, some analysts suggest that delaying action could strategically keep Iranian forces on high alert. A significant military action by Israel could escalate tensions if Iran retaliates. Commodities like oil, gold and silver are key assets to watch under these circumstances.
