Morning Wrap: The Yen’s Bullish Rally! What Will Today’s Session Bring? (10.07.2026)
Market Overview
The USD/JPY is currently trading at 161.823, down by 0.31%. Oil prices have seen a slight increase, with Brent crude at $76.45, up by 0.52%.
Geopolitical Tensions
Ongoing tensions between the US and Iran are in focus, although the market perceives the situation as manageable. A senior US official confirmed that technical discussions with Tehran will continue. President Trump declared the ceasefire with Iran "over" at the NATO summit in Ankara, but later mentioned that Iran reached out to negotiate. Iran's control over the Strait of Hormuz remains a critical factor, with tanker traffic significantly reduced from an average of 33 to just 13 per day. Mediation efforts by Qatar and Pakistan are underway to facilitate dialogue between the US and Iran.
Economic Indicators
Japan's Producer Price Index (PPI) for June increased by 7.1% year-on-year, surpassing expectations of 6.8% and the previous month's 6.3%. This data supports the Bank of Japan's potential for further interest rate hikes. Finance Minister Katayama has announced initiatives to encourage the Government Pension Investment Fund (GPIF) to invest more in domestic assets, addressing concerns about the independence of the Bank of Japan following recent sell-offs in Japanese Government Bonds (JGBs). The yield on 10-year US Treasury bonds remains stable at 4.541%, although there are warnings of increased volatility as the Federal Reserve adopts a more reactive approach.
Market Movements
On Wall Street, the Nasdaq Composite rose by 1.3%, the S&P 500 gained 0.8%, and the Dow Jones increased by 0.3%, driven by a rally in semiconductor stocks following significant investments from a major US memory manufacturer. However, futures for US indices showed slight declines on Friday morning, with the S&P and Nasdaq down by approximately 0.1% and the Dow remaining flat.
Asian Market Performance
Asian markets experienced a surge on Friday, led by a rebound in the AI chip sector. The Kospi jumped over 4%, with the Kosdaq rising by 5.9%. The Nikkei 225 gained around 1.5-2%, and the Topix increased by nearly 0.5-0.75%. The Hang Seng index rose by 0.45-1.86%, while the Chinese CSI 300 saw gains of 0.33-0.4%. Despite this rebound, the KOSPI is on track for a third consecutive week of losses.
Currency Movements
The Japanese yen has strengthened significantly following comments from Finance Minister Katayama regarding the GPIF. Analysts suggest that the structural capital flow from pension funds, which currently hold 50% of foreign assets, may provide more sustainable support for the yen compared to currency interventions. The US dollar is underperforming, while the Polish zloty has hit its lowest levels in a year against both the euro and the dollar.
Commodities Update
Oil prices are stable, with Brent trading between $76.40 and $76.57 per barrel and WTI between $72.22 and $72.34 per barrel, following a reduction in concerns over energy infrastructure. Citi maintains a base-case scenario for Brent at $75 in Q3, contingent on a US-Iran agreement and the reopening of the Strait of Hormuz. Gold has seen a slight decline of 0.21%, trading around $4,114-$4,116, while silver is up by 0.58% and natural gas has increased by 0.17%.
Company News
SK Hynix is set to debut on the Nasdaq with American Depositary Receipts (ADRs) priced at $149 per share, raising approximately $26.5 billion in capital. The IPO was oversubscribed, and the company is trading at a forward earnings ratio of 4.8x, compared to an industry median of 29.84x, raising questions about the narrowing of the "Korean discount." SoftBank Group shares rose over 11%, and Samsung Electronics gained 4.3% in response to the AI chip rally. Attention in the aviation sector is focused on Delta Air Lines' quarterly results, which are expected to be released on Friday morning.
Cryptocurrency Market
Bitcoin is trading up by 1.14%, within the range of $63,851-$64,041, reflecting positive market sentiment. The European session is anticipated to be influenced by SK Hynix's Nasdaq debut, Delta Air Lines' results, and ongoing developments in US-Iran negotiations and capital flows from Japanese pension funds.