Market News
Morning Bid: Yen's big week begins - REUTERS
A look at the day ahead in European and global markets from Tom Westbrook
Tokyo traders returned on Tuesday from a three-day holiday weekend, showing little inclination to repeat the yen's low-liquidity climb to the strong side of 140 per dollar, where it made a brief cameo on Monday.
But the dollar/yen pair - and the 140 milestone - are in the spotlight this week, with the Fed expected to begin a U.S. easing cycle and the Bank of Japan charting a path to interest rate hikes.
Market pricing for an outsized 50-basis-point Fed hike on Wednesday ran to 67% on Tuesday, up from 30% a week ago.
The yen hit a 38-year low on the dollar in early July but has been on a tear since, gaining more than 12% as the gap between two-year U.S. and Japanese rates shrank by some 130 basis points over 11 weeks.
Further gains are likely if a nudge from either a dovish Fed or a hawkish BOJ pushes it firmly through 140, which would open the way to an assault on last January's yen peak at 127.215 per dollar.
Elsewhere in Asia, Australia's benchmark ASX 200 (.AXJO) hit a record high while Chinese home appliance maker Midea rose 9.5% on its trading debut in Hong Kong. Mainland Chinese markets were closed for a holiday.
Key developments that could influence markets on Tuesday:
Economics: German sentiment survey, U.S. retail sales, Canada CPI
