(Reuters) – The Japanese yen jumpedon Thursday, in a transfer merchants mentioned was almost certainly the results of greenback promoting after a weak studying of U.S. shopper inflation, somewhat than official intervention from Tokyo authorities.
The greater than 2% leap within the yen following the month-to-month U.S. information launch rang alarm bells for a market that was already cautious of the danger of Japanese official shopping for because the foreign money has lately plumbed 38-year lows.
The greenback fell as a lot as 2.1% to 158.3 yen.. It was final buying and selling at 158.78 yen, down 1.84% on the day.
The yen strengthened throughout the board and the euro was down round 1.2% at 173.26 yen
COMMENTS:
KENNETH BROUX, HEAD OF CORPORATE RESEARCH FX AND RATES, SOCIETE GENERALE
“It’s certainly a big move but I don’t think we can say it’s anything to do with intervention,” mentioned Societe Generale (OTC:)’s head of company analysis FX and charges Kenneth Broux.
“The US CPI has been a trigger and it’s more about stops being triggered than intervention,” he mentioned.
STEVE ENGLANDER, HEAD, GLOBAL G10 FX RESEARCH AND NORTH AMERICA MACRO STRATEGY, STANDARD CHARTERED BANK NY BRANCH, NEW YORK
“Obviously the yen story has been a rate differential story and positions – long dollar/yen positions – have piled up. So when you get a number that’s this definitive in terms of making, say, September highly probable and kind of reinstating the disinflation story, that rate differential story erodes. Most likely it was cleaning up of positions because my sense from clients, especially short-term traders, is that everybody had some long dollar/yen on that they were thinking that maybe 165 or higher was kind of where it was headed.”
“There’s some vague speculation on intervention, just everybody’s looking at the price chart and kind of saying, oh, that’s, kind of a sharp drop so maybe could have it been. The answer is it could have, but I’d say most likely its position squaring rather than any official moves.”
LEE HARDMAN, SENIOR FX STRATEGIST, MUFG, LONDON
When the market is closely positioned in a single course after which it goes the opposite approach it may well set off this sort of abrupt transfer. Greenback/yen lengthy positioning was very stretched
COLIN ASHER, SENIOR ECONOMIST, MIZUHO, LONDON
“Most likely, it’s just short covering, as speculation of US rate cuts on the horizon build in the wake of the negative CPI print.”
” is the G10 pair where positioning is most stretched.”
“It’s certainly a sizable move, with the intra-day range the biggest since the intervention at the start of May.”
