Yen spikes as spectre of intervention spooks investors
By Tom Westbrook
SINGAPORE, July 18 (Reuters) -Japan's yen scaled a six-week high on Thursday, spurring speculation of an official push, while the dollar nursed broad losses as markets prepared for U.S. rate cuts in a few months.
The euro EUR=EBS, which scaled a four-month peak overnight, hovered near that level at $1.094 and sterling GBP=D3 was steady at $1.3007, just below the one-year top it had made in overnight trade.
The yen JPY=EBS gained sharply on Wednesday and was up another 0.5% to touch 155.37 per dollar in the otherwise quiet early hours of the Asia session on Thursday.
Bank of Japan money market data suggested authorities may have bought nearly 6 trillion yen last week and traders said this week's moves bore the hallmarks of further intervention, or at least of markets spooked by that prospect.
"Many traders and Japanese investors, after intervention, were looking to reload on their trades," said National Australia Bank strategist Rodrigo Catril in Sydney.
"The big move (on Wednesday) would have caught them offside and triggered a little bit of a reassessment if not an unwinding of those positions." Net yen shorts 1097741NNET stood near a 17-year high last week.
Interest rate markets are pricing more than 60 basis points of U.S. interest rate cuts this year and some 20 basis points of hikes in Japan, narrowing the wide rates gap that had encouraged investors taking on large short positions in the yen. FEDWATCH
Catril and other analysts also pointed to remarks from U.S. presidential candidate Donald Trump - who described the dollar's strength and the weakness of the yen and yuan as a big problem in a Bloomberg Businessweek interview - as rattling markets.
So far this year the yen is the worst-performing G10 currency on the dollar, losing more than 9%, while the yuan is down about 2.2%.
China's yuan rose slightly on Wednesday and will be closely watched on Thursday while traders await news of a key leadership gathering in Beijing that is expected to end later in the day.
In early offshore trade the yuan CNH=EBS hovered around its 50-day moving average, at 7.2667 per dollar.
New Zealand's dollar NZD=D3 jumped through its 200-day moving average on Wednesday and was holding gains early on Thursday at $0.6076 after some sticky domestic elements of inflation gave pause to bets on imminent interest rate cuts.
The Australian dollar AUD=D3 was steady at $0.6725.
World FX rates https://tmsnrt.rs/2RBWI5E
Reporting by Tom Westbrook; Editing by Muralikumar Anantharaman
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
