ForexLive Asia-Pacific FX news wrap: USD/JPY jumped above 160

• Oil has dribbled lower – Gaza ceasefire talks, US inflation cited
• USD/JPY skyrockets above 160; other major currencies rally while Japan markets closed
• Japan is on holidays today. Yen is collapsing, with no prospect of even verbal support.
• USD/JPY leaps above 160 (briefly)
• PBOC sets USD/ CNY reference rate for today at 7.1066 (vs. estimate at 7.2579)
• Japan PM Kishida’s party lose 3 key by-election seats
• CE analysts forecast an RBA 25bp interest rate hike at its next meeting, May 7
• Barclays says expect a hawkish Fed and Powell at this week’s FOMC meeting
• Data released over the weekend showed China’s industrial profits fell y/y in March
• It’s a huge week ahead – the FOMC is the highlight but there are plenty of others
• USD/JPY back to its high after the quick early dip under 158.00
• Reminder, Japanese markets are closed today, Monday, 29 April 2024. JPY will swing around.
• Elon Musk met Premier Li Qiang in an unannounced trip to China
• Chengdu (major city in southwest China) has removed home-buying curbs
• ICYMI Swiss National Bank Chairman Jordan says wary about buying Bitcoin
• Chinese brokerage CICC cutting investment banking base pay by 25%
• Trade ideas thread – Monday, 29 April, insightful charts, technical analysis, ideas
• Monday morning open levels – indicative forex prices – 29 April 2024
• Week Ahead Preview: Highlights include FOMC, NFP, ISM, and PMI data
• Weekly Market Outlook (29-03 May)
• Video: Why the yen is so weak and what’s next
• News is making people miserable
• Forexlive Americas FX news wrap 26 Apr. The JPY tumbles as BOJ does not look to support

The
yen briefly hit ¥160 against the dollar here
on Monday.
JPY
fell too against other
major currencies. USD/JPY
hit its highest since April
1990. CFTC
data published on Friday, for the week ended April 23, showed hedge
funds and speculators held the largest short yen position in 17
years. This would ordinarily be a reason to be wary of further yen
losses but this didn’t impact. The renewed
plunge in the yen was driven by both stop loss buying (despite huge
yen shorts there were plenty of yen longs looking for a change of
trend) and the triggering of barrier options circa 160.00. Highs seen
after 160.00 broke were just over 160.20 (160.245 sighted on EBS)
before the pair reversed almost as quickly down to around 159.30.

As
a reminder, the downtrend in JPY is long-standing and, in summary, is
driven by:

• Sticky
  US inflation is going to keep the Fed higher for longer
• And
  thus the gaping US-Japan yield differential will continue to underpin
  USD/JPY
• Add
  in subdued Japanese inflation data
• And
  the dovish BOJ on hold again last week

While
I have been very dismissive of potential intervention from the Bank
of Japan (ps. its Japan’s Ministry of Finance that will instruct
the BOJ when to intervene) the move above 160 could well be described
as rapid (well, this is not in doubt!) and disorderly. These are key
trigger points for the MoF. I do maintain, though, that intervention
will be a waste of Japan’s USD holdings. Given those points above, a
driving down of USD/JPY by intervention will just present a dip buying
opportunity for those happy with the 500 or so pips of carry on
offer.

As
a side note, today was a market holiday in Japan and liquidity was
somewhat thinned out by the absence of Japanese markets. We heard nothing at all from Japanese officials. No verbal support at all was offered for the JPY.

Elsewhere,
and notable, property
sector shares in China rose strongly, helped along by further support
moves over the weekend:

• Chengdu (major city in southwest China) has removed home-buying curbs

Oil dribbled lower, the prospect of a ceasefire in Gaza cited, along with the likelihood of a more hawkish sounding Federal Reserve this week (the Federal Open Market Committee (FOMC) statement is due Wednesday).

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