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Asian markets higher before Jerome Powell's speech; the yuan goes down even further



Hong Kong Hang Seng Index ( HSI ) advanced 0.6%, while the Chinese Shanghai Composite Index ( SHCOMP ) ] also gained 0.6%.
Japan Nikkei ( N225 ) increased 0.2%, while South Korea Cospi ( KOSPI ) was flat. Trade and military tension between the two countries is increasing.

"The danger is … Powell is frustrating the markets and not as disgusted as the street hopes," Jeffrey Halley, senior market analyst at Asia Pacific for Oanda, wrote in a research note on Friday.

Meanwhile, South Korea said it would end its military intelligence sharing agreement with Japan on Thursday, an escalation in a trade dispute between the two countries that threatens global supply chains for smartphones and other gadgets.
Japan also announced that its core consumer price index, which excludes data on fresh food price fluctuations, rose only 0.6% in July, a two-year low, according to Refinitiv. The broader consumer price index rose by 0.5%.
The Bank of Japan kept its low interest rates unchanged at last month's policy meeting, but said at the time that it would "not hesitate" to make adjustments if necessary. [1
9659007] "The big picture is that inflation will drop next year," writes Marcel Tielian, a senior Japanese economist in capital economics, in a research note Friday.

The Chinese yuan also dropped on Friday. The National Bank of China has set its daily reference rate for the currency at 7.0572 against the US dollar, the lowest since March 2008.

Markets are in a state of "currency war", writes Stephen Ines, managing partner at Valuable Markets, in research note. But he added that the slimming of the yuan shows that the central bank of China "possibly puts one of their cards [trade war] on the table."

"I don't think it's the funniest of risk asset alerts," Innes added.

CNN's Business "Donna Borak Contributed to History.


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