Aug 7 (Reuters) – No time for a break. Even in the middle of August, there is plenty of market news to watch.
There’s possibly more U.S.-Japanese intervention to support the yen, key economic data, and, whether the U.S. will accept an emerging interim deal being negotiated by Iran and Oman that would give Tehran control of the Strait of Hormuz.
Here’s all you need to know about the coming week in financial markets from Amanda Cooper, Dhara Ranasinghe and Alun John in London, Lewis Krauskopf in New York and Rae Wee in Singapore.
1/ THE ANGEL FROM MY NIGHTMARE
A currency languishing at four-decade lows — making fuel imports more expensive during an energy shock — is a nightmare for any policymaker. Right now, that policymaker is in Japan.
Cue Scott Bessent and a well-timed photograph of the U.S. Treasury Secretary’s “to-do” list mentioning purchases of yen. Coupled with a rare joint U.S.-Japanese intervention to stem yen weakness, it may have eased Tokyo’s concerns.
Job done? Not quite.
FX traders still have plenty of unanswered questions.
First, will policymakers signal that Japan’s central bank is preparing a September rate hike to reinforce the yen’s rebound? Then there is the bigger question over the use of euros rather than dollars in the U.S. intervention.
Some analysts say that suggests the U.S. Treasury does not want bond market strains worsened by foreign central banks selling Treasuries to fund currency-support operations. The debate over the resilience of the dollar’s reserve-currency status is far from over.
Investors are clutching at yet another deal to end the Gulf conflict and ensure safe passage through the Strait of Hormuz. This time, the talks involve Iran and Oman, with no U.S. involvement, or sign-off, so far.
But with the conflict entering its 24th week, expectations that any agreement will hold remain modest. Yemen’s Iran-backed Houthi militias have attacked Saudi Arabia and targeted tankers in the Red Sea, another key route for Gulf oil exports.
With less than five months until midterm elections, the U.S. president wants a deal. Gas prices remain stubbornly above $4 a gallon and, while inflation is not as bad as feared, it’s a problem with voters.
For now, optimism about earnings growth and the potential for AI-driven <a href="https://bitcomme.com/have-we-entered-an-era-of-high-productivity-growth/” title=”Have We Entered an Era of High Productivity Growth?”>productivity gains may calm investors and encourage acceptance of a near-term fudge for the strait.
U.S. inflation data on Wednesday could add to growing pressure on the Federal Reserve to raise interest rates.
