The USD/JPY reached a multi-decade high overnight at 151.971 (highest since July 1990) in a test of wills between speculators and the Bank of Japan. In response to the yen weakness, Japan’s Finance Minister said the BoJ was ‘watching market moves with a high sense of urgency’, a not-so-subtle threat of direct intervention. The last time the BoJ intervened on behalf of the JPY (by selling USD to artificially prop up the JPY) was in 2022 when USD/JPY reached 151.94. Three months later the USD/JPY had reached a low of 127.21, a 16.28% decline for the dollar. The rising stakes in defending the JPY, and the potential volatility in JPY crosses is a magnet for FX traders who have been enduring historic low volatility in the foreign exchange markets.
USD/JPY has retreated to 151.34 on the BoJ comments, but dollar bulls will almost certainly mount another offense against the JPY and force direct action from Japan’s central bank.
The dollar has gained vs. 9/10 of the G10 currencies today, lifting the U.S. Dollar Index by 0.14% to 104.44. Primary gains for the dollar are +0.42% vs. SEK and +0.39% vs. NOK. The dollar’s single gain is vs. the JPY, +0.15%.
U.S. Treasury yields are lower by inconsequential margins with traders on hold ahead of upcoming inflation data (tomorrow’s Core PCE Price Index and Friday’s Personal Income/Spending and PCE Deflators).
Oil prices are lower today with WTI Crude -0.62% at $81.11/barrel (partially explains SEK and NOK weakness). Gold is making a move, +0.58% today at $2,191.18. A daily close above $2,185.96 will be a new all-time record.
