The US Inflation Report Is Causing Traders To Mix Up Asian Markets

(CTN News) – On Monday, Asian markets were mixed, ahead of the release of important US inflation data later this week, as traders remained concerned that the Federal Reserve might raise interest rates again in the near future.

Several of the key decision-makers at the central bank issued warnings last week that more tightening might be necessary to keep prices under control, dampening optimism that the hiking cycle is at its end.

As a result, Asian Inflation shares fell on Friday, although a tech-led rally on Wall Street earlier in the week supported traders on Monday.

During the middle of the week, consumer price indexes and retail sales were expected to be the focus. As a result, gains were limited during this period.

SPI Asset Management’s Stephen Innes believes that the forthcoming CPI report could reintroduce the possibility of a rate hike in the near future.

As of now, the market is largely discounting the possibility of another price increase at this time.

In spite of the fact that there has been some speculation that an aberrant inflation overshoot is necessary to make the next policy meeting uncertain, this week’s data indicates that the risks still lean toward a sustained high inflation plateau regardless of an overshoot.”

During the early part of the trading season, there were a number of strong markets in Tokyo, Hong Kong, Seoul, Taipei, and Jakarta, but there were also a number of weak markets in Shanghai, Sydney, Manila, and Wellington.

Former head of the European Central Bank, Christine Lagarde, predicted a resurgence in inflation on Friday. This fuelled fears that global interest rates may remain elevated for a long period of time.

Furthermore, the official stated that rates are not expected to be cut for at least “the next couple of quarters”.

Traders are paying close attention to the dollar’s value against the yen, since the Japanese authorities have warned that they may intervene in the currency market if US Inflation borrowing costs do not decline.

However, Sonal Desai, a market analyst at Franklin Templeton, believes that the Bank of Japan will likely change its ultra-loose monetary policy in the near future, resulting in a significant increase in the yen’s value.

“There will be a change in policy in Japan, and that will make the yen more attractive,” she told Bloomberg Television.

In the end, the BoJ will be forced to change its interest rate policy, leading to the return of money to the economy.

Moreover, investors will be watching for a meeting between US President Joe Biden and his Chinese counterpart Xi Jinping at the APEC summit in San Francisco later in the week amid signs of easing tensions between the two economic superpowers.

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