On Friday, (July, 12th 2024) Asian markets showed mixed results following varied performances on Wall Street, despite growing expectations of a US interest rate cut. The yen experienced significant volatility amid speculation that Japanese authorities intervened in forex markets to support the currency.

The backdrop for these market movements was a lower-than-expected reading on the June consumer price index in the US, which bolstered expectations that the Federal Reserve could lower interest rates in September and possibly again by early next year. Federal Reserve Chair Jerome Powell underscored that waiting for inflation to reach the bank's two percent target before adjusting monetary policy might be too late, signaling readiness for proactive measures.

Despite a decline in major US indices like the S&P 500 and Nasdaq from their recent highs, most of Asia continued Thursday's positive momentum. Hong Kong's market surged by around two percent, while gains were also seen in Shanghai, Singapore, Sydney, Wellington, and Manila. In contrast, Tokyo, Seoul, and Taipei faced declines.

Market analysts suggested that the softer US inflation data provided an opportunity for Japanese authorities to intervene in forex markets, supporting the yen. This intervention was speculated to have contributed to the yen's surge against the dollar, marking a notable move from around 161.50 to as strong as 157.44 yen per dollar.

Charu Chanana from Saxo Markets noted a potential new approach to Japanese interventions, leveraging supportive fundamentals to sustain yen strength. Meanwhile, Ray Attrill of National Australia Bank suggested that such a significant movement likely involved official actions to stabilize the yen.

While rumors circulated regarding official intervention, Japan's top currency diplomat Masato Kanda refrained from confirming any market involvement, emphasizing the impact of rapid fluctuations on economic stability.

In summary, Asian markets displayed varied responses to US economic signals, with Japan's yen experiencing notable movements amid speculation of official intervention to stabilize currency markets.