ForexLive Asia-Pacific FX news wrap: Massive swings for USD/JPY – intervention then bounce

USD/JPY as it happened:

• USD/JPY slammed lower
• USDJPY falls below 100 hour MA and runs lower.
• USD/JPY is cratering, drops under 155.00 in super-thin intervention trade
• Those wide spreads you are seeing in yen crosses are a feature, not a bug
• “Wow, USD/JPY is up nearly 200 points!” (Man seeing tree, not forest)
• Japan’s Kanda says he has nothing to say about whether Japan intervened in the yen
• Japan’s Ministry of Finance have revealed their very weak hand propping up the yen
• Schrodinger’s yen – is it up 300 points or down 150?
• Japan’s Ito says authorities are trying to place a 160 ceiling on USD/JPY

Other:

• European Central Bank’s Lane is speaking Thursday afternoon US time
• Bank of Canada Governor Macklem and Deputy Rogers will speak on Thursday
• Expectations for Federal Reserve interest rate cuts in 2024 range from 0 to 125bp
• Australian April 2024 Trade Balance is a smaller surplus than in March, and a miss
• Waiting for the PBOC CNY reference rate setting? None today, China is on holidays.
• Bank of America still forecasting a December Federal Open Market Committee (FOMC) rate cut
• South Korea fin min vows ‘bold market stabilization measures’ against excessive volatility
• BOJ March meeting minutes says Japan’s tightening is different to that in the US and EU
• A whole bunch of Australians are going to get free money on July 1
• New Zealand Building Permits for March 2024 -0.2% m/m (prior +14.9%)
• Bank of Canada’s Rogers says not seeing a high level of stress in the mortgage market
• Bank of Canada Governor Macklem – cut in rates a signal we are on track to 2% inflation
• Bank of Canada Governor Macklem expects core inflation to continue to ease gradually
• Broader stock indices snatch defeat from the jaws of victory
• Forexlive Americas FX news wrap: Fed pushes back against rate hike fears
• Trade ideas thread – Thursday, 2 May, insightful charts, technical analysis, ideas

USD/JPY
was sitting around 157.50 after the market close in the US on Wednesday
afternoon before intervention selling hit it, hard. From 157.50 it
fell big figure after big figure in super-illiquid trade over the
course of about 20 minutes before finally bouncing from 153.00. In
the posts above you’ll find an explanation of why that time of day
is so thinly traded (if you need an explanation). The Bank of Japan
took full advantage by driving the yen higher. The flip side of this
action is that the Bank appears to be unwilling to take on the forex
market at liquid times. You’ll recall the first bout of
intervention we had was on Monday, a Japanese market holiday and also
therefore thinner liquidity than normal.

So,
down to 153.00 before a bounce, a very rapid one back to 154 and then
a little slower to 155. Over the course of the session the rebound
extended to above 156 and its just under there as I post (nope, its popped back above 156.00, see chart below).

As
a heads up, Friday and Monday are Japanese holidays, markets are
closed. This’ll heighten concerns there could be more to come from
the BoJ.

Oh,
I am writing about intervention but I should note that Masato Kanda, vice-minister for international affairs at Japan’s Ministry
of Finance, and the official who will instruct the BOJ to intervene,
when he judges it necessary, would not comment to confirm or deny
that intervention had taken place. Personally, I don’t think he’s
fooling anyone.

Elsewhere
it was relatively subdued as traders digested the less dovish FOMC
and Powell. Major FX, yen excepted, is barely changed on the session
here.

For
Australia we had data showing a smaller than expected trade surplus
in April, and that dwelling
approvals have fallen to their lowest level since April 2012. Also
from Australia a state premier (the state has around 20% or so of
Australia’s population) is giving away AUD1,000 to each household
(this’ll total around AUD 2.5bn) in the state to cover electricity
bills. Such fiscal stimulus is another reason for the RBA to not be
too keen to cut rates soon.

USD/JPY:

This article was written by Eamonn Sheridan at www.forexlive.com.