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Friday, Jul 26, 2024

Dollar falls against yen, markets suspect intervention

Dollar falls against yen, markets suspect intervention

The battered yen jumped against the dollar on Friday, triggering speculation that Japanese authorities may be in the market to stem a slide in their currency.

The yen rose as high 144.80 per dollar in late morning U.S. trade, up about seven yen from a 32-year peak of 151.94 yen. Dollar/yen was last down about 1.5% at 147.95.


COMMENTS


MAZEN ISSA, SENIOR FX STRATEGIST, TD SECURITIES, NEW YORK

"It’s very clearly the Ministry of Finance stepping in to sell dollar-yen.

"It seems like, actually, just looking at the evolution of some of the portfolios … these are the sorts of assets they have on their balance sheet, you know, the securities portion of that balance sheet had been declining a lot and that is really Treasuries, so, given some of the price action in fixed income markets this week, particularly in the U.S. curve would be indicative that they are likely selling Treasuries to help fund any intervention."

"They are trying to staunchly defend their very easy policy.

"It’s long been understood and a lot of historical evidence to suggest this is the case, that fx intervention is a temporary fix and it is not sustainable."

"I would say today’s move has been uniquely timed in that it followed the Wall Street Journal article about any sort of calibration risks."

"And then two, a lot of folks had been looking at 150 as a key level that they would see some kind of intervention, and they let it run through to basically 152 and then the timing of their intervention happened at a very illiquid time, basically, as London was about to head home for the weekend, and it seems like it is designed to inflict as much pain as possible on, they like to use the term, speculators. So, we saw the finance minister I think last night talk about strictly talking about speculators. And so, I would say a week before the Bank of Japan meeting I think it’s indicative that they want to continue to defend that policy, but I think their timing is designed to do as much damage as possible to those trying to take top-side bets on dollar-yen."

COLIN ASHER, SENIOR ECONOMIST, MIZUHO, LONDON


"The price action certainly makes it appear like intervention. If it is intervention it is well timed after the Wall Street Journal article knocked the stuffing out of the ever upward rise in U.S. Treasury yields."

KARL SCHAMOTTA, CHIEF MARKET STRATEGIST, CORPAY, TORONTO


"It looks like the Ministry of Finance is intervening here. We are seeing lots of dollar selling and the yen moving almost vertically as shorts get squeezed."

"We are hearing large blocks are being traded. That typically means either larger institutions are moving money or that a central bank is intervening in size. The clearest evidence is just the scale of dollar selling that is happening."

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