The TSX ends its losing streak, with mining and tech shares leading. Traders took a respite on Tuesday as Asian stock markets inched higher ahead of U.S. inflation data that might influence when or if the Federal Reserve hikes rates again. Comments from China and Japan’s central banks stopped the dollar’s advance.

After Bank of Japan Governor Kazuo Ueda suggested policymakers may have enough economic evidence by year’s end to conclude that short-term rates would need to rise, the yen overnight had its best day versus the dollar in two months.

Following news from Reuters that the central bank has increased its monitoring of dollar buying and a promise from officials to reverse any unfavorable trends, the yuan experienced its best day in six months.

Offshore, the yuan is trading at 7.3016 to the dollar, while the yen was last seen at 146.68, both lower than they were on Monday.

Yields on 10-year Japanese government bonds (JGBs) continued to rise on Tuesday, climbing by one basis point to a new high of 0.71 percent.
Ueda’s remarks “resulted in an intense move higher in Japanese swaps and government bond yields,” according to Chris Weston, head of research at brokerage Pepperstone in Melbourne.

Positive effects on yen longs are almost certain. Since the conclusion of the spring wage talks won’t be known until April 2024, I’m trying not to get too excited at this time when the actions are more of a medium-term problem.

The announcement that China’s biggest private property developer, Country Garden (2007. HK), has received clearance from creditors to extend repayments on six onshore notes by three years brought some relief to Chinese investors.

As a result, the Hang Seng Mainland Properties Index (.HSMPI) in Hong Kong gained as much as 1.5%, recovering from an earlier loss of almost 2%.

According to Matt Simpson, senior market analyst at City Index, “this is likely just another case of kicking the can down the road,” but it seems to have halted the bleeding on the property index at least.

The most comprehensive index of Asia-Pacific stocks outside of Japan tracked by MSCI (.MIAPJ0000PUS) rose by 0.12%. The Nikkei 225 in Japan gained 0.61% as investors awaited U.S. inflation statistics and the next meeting of the European Central Bank to determine future interest rate forecasts and market sentiment.

The U.S. data is due on Wednesday, and markets predict the annualized core inflation rate to decrease to 4.3% in August, while the headline rate is expected to increase to 3.6%.

OCBC analyst Christopher Wong speculated that “a lower-than-expected print may slow the U.S. dollar’s rise,” and a higher reading “could potentially un-nerve risk sentiments” by reinforcing market expectations for additional rate rises and fueling dollar gains.

The futures market for interest rates now prices a 45% likelihood of another rate rise in the United States before the end of the year.

This week, British chip designer Arm Holdings plans to list in New York to raise about $5 billion, putting investors’ risk tolerance to the test.

U.S. stock markets rose overnight thanks to a lower dollar and an upgrade on Tesla from Morgan Stanley analysts. The price of Tesla (TSLA.O) shares increased by 10%. The S&P 500 (.SPX) gained 0.7%.

U.S. futures were down 0.11% in early Asia trading.

The Australian dollar fell because consumer morale has been falling steadily below the neutral 100 threshold since March 2022, the longest such sequence since the early 1990s recession.

With the yuan appreciating Monday, the Australian dollar saw a rebound and last traded at $0.6433, up 0.04%. And the Kiwi fell to $0.5918, down 0.3% from yesterday.

Ahead of Thursday’s ECB meeting, investors have started reducing their long euro bets. Thus, the euro’s gains versus the dollar have been modest. The market prices are a 56 percent possibility that policymakers maintain current interest rates.

“There is a sense that ECB is already done for the cycle,” Maybank analysts said in a letter to clients.

The euro may be in for further losses in light of recent PMI readings. The fact that they still think the Fed will increase interest rates fuels the fire.

The yield on the benchmark 10-year Treasury note was unchanged at 4.2940%.

Brent oil futures remained unchanged at $90.96 per barrel on the commodities markets. Gold held steady at $1,922 an ounce on Monday, but bitcoin plunged below $25,000 for the first time in three months as investors fled the cryptocurrency.