Currency

The Japanese yen surged to a nearly four-week high against the U.S. dollar on Friday, fueled by speculation that Japanese authorities intervened in the market for a second day to prop up the currency. The rally was further supported by data showing a moderation in U.S. inflation, increasing the likelihood of a Federal Reserve rate cut as early as September.

The Japanese government and the Bank of Japan likely intervened in the foreign exchange market twice last week to support the yen against the US dollar, according to market estimates based on BOJ data. The interventions, estimated to be worth around 5 trillion yen, followed sharp rises in the yen against the dollar on July 11 and 12.

The Australian dollar has seen a decline in value following worries about China's economic health and a drop in iron ore prices, a major Australian export. Analysts express concerns over the Chinese government's efforts to stimulate the economy and the potential impact on Australia's economy, particularly related to tax revenue from iron ore exports.

The technology-heavy NASDAQ index tumbled 3.6% in the US due to disappointing earnings from Tesla and Google, while the Indian IT sector surged 7% on the back of strong Q1 earnings from major IT companies. This divergence raises the question of whether investors should book profits in their IT holdings or if there is still room for further growth.

The dollar fell against the yen for the second consecutive day, leading to speculation on Japanese intervention, as investors turned their focus to U.S. Federal Reserve interest-rate cuts. Market reactions were mixed as the producer price index report showed higher prices than anticipated in June, while the consumer price index report's lower-than-expected data raised expectations for Fed rate cuts starting in September.