Yen dives as BOJ hints no rate hikes while markets are volatile
Updates at 0414 GMT
By Ankur Banerjee
SINGAPORE, Aug 7 (Reuters) -The yen crumbled on Wednesday after a Bank of Japan official played down the chances of a near-term rate hike in a fresh twist to the week that started with massive moves driven by U.S. recession fears and unwinding of popular carry trades.
The yen JPY=EBS was last down more than 2% at 147.69 per dollar having touched session lows of 147.935 following the comments from BOJ Deputy Governor Shinichi Uchida. The last time the yen dropped over 2% was in March 2020.
"As we are seeing sharp volatility in domestic and overseas financial markets, it's necessary to maintain current levels of monetary easing for the time being," Uchida said. His remarks contrasted with Governor Kazuo Ueda's hawkish comments made last week when the BOJ unexpectedly raised interest rates.
"I cannot fathom why they needed to say that they won't hike rates in turbulent times, unless of course the goal is to signal no more hikes and to weaken the yen they just strengthened," said Matt Simpson, a senior market analyst at City Index.
The rate hike from BOJ last week along with bouts of interventions from Tokyo in early July led investors to bail out of once-popular carry trades, in which traders borrow the yen at low rates to invest in dollar-priced assets for higher returns.
That took the yen to a seven-month high of 141.675 per dollar on Monday, from the 38-year lows of 161.96 it was languishing in just at the start of July.
But Uchida's comments could still prop up the carry trade, investors say, even with more room for unwinding of the trades.
"Uchida has saved the carry trade - for now," said Rong Ren Goh, a portfolio manager in the fixed income team at Eastspring Investments.
"There are also other moving parts, but yes, Japan policy is one of the important moving parts of the overall risk structure in the market. The other important ones would be U.S. economic data, which in turn informs Fed policy trajectory."
The swing in yen positioning seen over the last one month was among the largest on record, according to strategists at JP Morgan, with their models suggesting 65% of yen shorts have now been covered as of Aug. 6.
This week's market volatility was exacerbated by a softer-than-expected U.S. job report on Friday, and disappointing earnings from major tech firms, sparking a global sell-off in riskier assets as investors feared the U.S. economy was heading for a recession.
Traders have also adjusted their expectations from the Federal Reserve this year following the soft jobs report last week, with nearly 105 basis points of easing anticipated by year-end.
Markets are now pricing in a 70% chance of the Fed cutting rates by 50 bps in September, CME FedWatch tool showed, compared with 85% chance a day earlier, with major brokerages also anticipating a large rate cut in the next meeting.
Some analysts though expect the Fed to take a measured approach.
"My sense is that the Fed is doing what it does, it wants some reaffirmation of the trend from several data points ... before drawing a conclusion," said Aninda Mitra, head of Asia macro and investment strategy at BNY Advisors Investment Institute.
"Whereas the market looked at one NFP print ... and jumped to the conclusion that a rate cut was needed," Mitra said, referring to last week's soft jobs data.
On Wednesday, the euro eased slightly to $1.0916, while sterling GBP=D3 last fetched $1.27135, not far from the five-week low it hit in the previous session.
The U.S. dollar index =USD, which measures the currency against six rivals, rose 0.27% to 103.26, inching further away from the seven-month low of 102.15 it touched on Monday.
In other currencies, the Australian dollar AUD=D3 was 0.61% higher at $0.65585, a day after the central bank ruled out the possibility of an interest rate cut this year, saying core inflation is expected to come down only slowly.
The Aussie has struggled in recent days, sinking to eight-month lows on Monday in the wake of the global markets meltdown but perked up on the day following BOJ comments.
The New Zealand dollar NZD=D3 was up 0.98% at $0.60125 following strong jobs data.
World FX rates https://tmsnrt.rs/2RBWI5E
Japan's yen under pressure https://tmsnrt.rs/36El8HW
Reporting by Ankur Banerjee and Vidya Ranganathan in Singapore; Editing by Shri Navaratnam and Jacqueline Wong
免責聲明: XM Group提供線上交易平台的登入和執行服務，允許個人查看和/或使用網站所提供的內容，但不進行任何更改或擴展其服務和訪問權限，並受以下條款與條例約束：（i）條款與條例；（ii）風險提示；（iii）完全免責聲明。網站內部所提供的所有資訊，僅限於一般資訊用途。請注意，我們所有的線上交易平台內容並不構成，也不被視為進入金融市場交易的邀約或邀請 。金融市場交易會對您的投資帶來重大風險。
所有缐上交易平台所發佈的資料，僅適用於教育/資訊類用途，不包含也不應被視爲適用於金融、投資稅或交易相關諮詢和建議，或是交易價格紀錄，或是任何金融商品或非應邀途徑的金融相關優惠的交易邀約或邀請。
本網站的所有XM和第三方所提供的内容，包括意見、新聞、研究、分析、價格其他資訊和第三方網站鏈接，皆爲‘按原狀’，並作爲一般市場評論所提供，而非投資建議。請理解和接受，所有被歸類為投資研究範圍的相關内容，並非爲了促進投資研究獨立性，而根據法律要求所編寫，而是被視爲符合營銷傳播相關法律與法規所編寫的内容。請確保您已詳讀並完全理解我們的非獨立投資研究提示和風險提示資訊，相關詳情請點擊 這裡查看。
