Traders on Lookout for Next Yen 'Red Line' | The Asia Trade 7/1/2026

SHERY: THIS IS "THE ASIA TRADE." ASIAN STOCKS SET FOR GAINS AFTER THE S&P 500 KNOWLEDGES ITS BEST QUARTER IN SIX YEARS WITH RUSSIA DATA UNDERSCORING U.S. ECONOMIC RESILIENCE. CHIPMAKERS ALSO CLOSING OUT THEIR BEST THREE MONTHS EVER.

THE YEN SLIDE FRONTING TRADERS TO SEEK POSSIBLE INTERVENTION WITH 163 TO THE DOLLAR -- THE YEN SLIDE PROMPTING TRADERS TO SEEK POSSIBLE INTERVENTION. DONALD TRUMP'S DISCLOSURES RAISE CONCERNS HE IS PROFITING FROM THE PRESIDENCY.

HAIDI: WE LOOKING LIKE QUITE A BIT OF ONE MILLION BRILLIANCE -- QUITE A BIT OF BRILLIANCE -- QUITE A BIT OF BOUYANC E AMID SIGNS OF BROADER ECONOMICS RESILIENCE DESPITE THE RISE WE HAVE SEEN IN DOMESTIC OIL AND GAS PRICES AND THE CONCERNS OVER THE WORRIES OVER THE

CONSUMER AS WELL AS THE FED TIGHTENING, BUT LOOK AT HOW WE TRADED IN THE LAST PART OF THE SESSION. LOOKING LIKE IT WILL PASS THROUGH TO THE ASIAN SESSION AS WELL. KOSPI FUTURES LOOKING PRETTY SOLID.

WE WILL GET THAT TAILWIND FROM THE CHIPMAKERS RALLYING OVERNIGHT. CHICAGO NIKKEI FUTURES LOOKING SOFTER, BUT WHEN IT COMES TO JAPAN, IT IS ABOUT THE YEN SLIDE TO A FOUR-DECADE LOW. WE ARE WATCHING FOR INTERVENTION SIGNS.

WE HAVE HAD A LOT OF VERBAL JAWBONING, BUT THAT HAS DONE LITTLE TO BOOST SENTIMENT IN THE CURRENCY. WE ARE ALSO WATCHING THE GEOPOLITICAL SITUATION, SEEING A BIT OF STUDYING, THE U.S. AND IRAN STILL IN TALKS.

FOR THE QUARTER, THE BIGGEST DROP SINCE THE PANDEMIC. NEW YORK-TRADED CRUDE PUTTING ON ABOUT .6%. SHERY: PLENTY TO DISCUSS IN THE MARKETS. LET'S BRING IN MARK CRANFIELD FOR MORE. LET'S START WITH HISTORIC NEWS.

THE MARKETS SEEM TO BE OPENLY TESTING JAPANESE AUTHORITIES. MARK: THEY ARE GETTING ENCOURAGEMENT TO DO SO. THE REPORT CAME OUT YESTERDAY CONFIRMING THAT JAPANESE AUTHORITIES DID NOT INTERVENE IN THE PERIOD WHICH ENDED JUNE 26. EVEN THOUGH DOLLAR-THE END WAS CREEPING HIGHER, THERE WAS NO

INTERVENTION FROM JAPANESE AUTHORITIES TO TRY TO REVERSE THAT DIRECTION, SO, CLEARLY, THAT IS AN ENCOURAGEMENT TO AGGRESSIVE TRADERS. THEY WANT TO PUSH THE YEN A LITTLE LOWER, EVEN PROVIDED THAT THE PACE OF YEN DECLINES IS NOT TOO FAST.

TRADERS ARE GETTING THE MESSAGE FROM JAPANESE AUTHORITIES THAT THEY ARE NOT TOO CONCERNED ABOUT THAT, SO THEY WILL STEP BACK FOR THE TIME BEING. THE FLIPSIDE IS U.S. YIELDS ARE RELATIVELY HIGH AND ROSE AGAIN LAST NIGHT, SO

THAT'S ENCOURAGING PEOPLE TO BUY THE U.S. DOLLAR. IF TRADERS GO BACK AND LOOK AT PRICE ACTION, ONE THING THAT MAY SURPRISE THEM IS HOW QUICKLY DOLLAR-YEN DECLINED FROM AROUND 260 TO 160, SO IT DOES NOT MEAN

TO SAY WE WILL SEE A QUICK REVERSAL OF THAT MARKET. IT'S MUCH MORE COMPLEX THAT IT WAS IN THE 1980'S, BUT IT SHOWS YOU IN TERMS OF PARAMETERS, GUIDELINES AS TO WHERE DOLLAR-THE END IS GOING, WE ARE PRETTY MUCH

IN NEW TERRITORY, SO THE UPSIDE DEPENDS ON U.S. RATES, THE RESPONSE ON JAPANESE AUTHORITIES, AND IT COULD GO A LOT FURTHER THAN PEOPLE ARE ORIGINALLY THINKING. HAIDI: WE HAVE SEEN THIS BEYOND THE ABILITY OF POLICYMAKERS TO BE ABLE TO DO VERY MUCH, RIGHT?

ARE WE SEEING BROADER IMPACT ON THE REST OF JAPANESE MARKETS? THE LONG-HELD ADAGE IS HOW GOOD IT HAS BEEN FOR EXPORTERS. DOES THAT STILL MAKE SENSE AS A TRADE?

MARK: CERTAINLY, IT IS AN ENCOURAGEMENT TO COMPANIES WHO ARE IN THAT SECTOR EXPORTING, BUT THEY ARE COMPETING WITH KOREAN AND CHINESE COMPANIES AS WELL, AND THE KOREAN WON IS STAYING RELATIVELY WEAK AGAINST THE JAPANESE YEN AS WELL, SO THERE'S NOT A HUGE BENEFIT.

ONE PLACE WHERE IT IS LIKELY TO GET DANGEROUS IS THE JAPANESE BOND MARKET. WE SAW THE BEGINNING OF THAT YESTERDAY. THE CURVE WAS STEEPENING QUICKLY AND LONG-TERM YIELDS RISING AS THE YEN GOT WEAKER.