The USD/JPY traded in a wide range overnight, reaching a high of 160.03 and 154.51 low, a 3.45% variance. Japan’s finance officials rarely comment on specific intervention activity, and true to form MOF Kanda said that if today’s JPY volatility was direct intervention it would not be disclosed until the end of May. The last time the USD/JPY traded at 160.00 was in 1990 and is now +13.45% YTD.
Likely intervention on behalf of the JPY kicks off what could be a volatile week in FX. Along with the usual month-end swings, the economic calendar includes Consumer Confidence (Tuesday), ADP Employment and ISM Manufacturing on Wednesday, the FOMC’s rate decision announcement on Wednesday, Factory Orders and Durable Goods Orders on Thursday, and Nonfarm Payrolls and Unemployment on Friday.
The likelihood of a May 1st 25 basis-point cut is currently 2.1%, distant from a 101.0% probability as recently as January.
Fed Funds Futures imply the most likely timing for a rate cut will be at the FOMC’s December 18 meeting, but a hardly convincing 43.5% probability.
The dollar is lower today in all G10 pairs, led by Japanese yen strength. The dollar index is -0.13% at 105.79, near the middle of its most recent 2-week range.
U.S. Treasury yields are slightly lower in lock step with the dollar’s weakness.
