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Asian markets decline
Escalating tensions between China and Japan escalate, while investors place bets on the yen amid a stronger divergence still.
Markets are speculating on a Bank of Japan rate hike as the Fed prepares for a potential cut.
Gold remained under $2,500, pressured by weak Chinese manufacturing data and rate cut expectations.
Stocks in Asia declined as investors grew cautious ahead of Friday's U.S. labor market data.
Asian markets
Stocks in Asia were lower this morning with investors turning cautious ahead of US labor market data on Friday.
Sentiment was further dampened by escalating China-Japan tensions, following a report that China is threatening retaliation if Japan enforces stricter restrictions on the sale of chips to Chinese companies. The report also indicated the retaliation could disrupt Japan's access to essential minerals critical for car manufacturing.
In currencies
The dollar was trading higher up by 0.02%, The yen traded at 146.50 per dollar, gaining 0.3% on the day but remaining near the two-week low of 147.16 reached on Monday.
Markets remain focused on when the Bank of Japan might implement a rate hike, especially as the Federal Reserve prepares for a potential rate cut. Despite the Fed's anticipated reduction, its rate is still expected to remain much higher than that of the Bank of Japan.
In data, markets are looking towards the US ISM Manufacturing PMI with expectations of an increase to 47.5 vs last month's 46.8.
In Commodities
Gold prices continued to trade below $2,500 near $2,489. After Chinese data showed a fall in the manufacturing PMI and investors factor in the first rate cut in September.
According to the CME Fed-Watch tool, Markets now see a 69% chance of a 25-basis point rate cut this month vs 31% expecting a 50 bp reduction.
