Over the weekend, the dollar-yen exchange rate became extremely volatile. In the London market on Friday, the movement of dollar strength was dominant along with the rise in US Treasury yields, but the rise in US Treasury yields also slowed down to the NY market. As dollar buying in European currencies and other currencies took a break, the cross yen gradually rose, and yen selling took the lead. The dollar/yen has accelerated its rise to just before 152 yen. In the middle of NY, the price plunged to the 146 yen level. Observations with masked intervention were running around.
In the dollar-yen exchange market at the beginning of the week, buying again took the lead. The high price increased from around 147 yen to around 149.70. And it became a dramatic drop to the 145.56 level. The market was convinced that the authorities would intervene to buy the yen. After receiving strong yen-buying intervention over the weekend, the market has been eerily quiet in the upper 148 yen range.
According to some reports, in the comprehensive economic measures to be decided by the Cabinet soon, “the government and the Bank of Japan will newly indicate their intention to pay close attention to the impact of market fluctuations, and will be in step with the sustainable and stable achievement of the price stability target of 2%.” ”. Clearly stating that market fluctuations will be closely monitored is likely to give the market a strong stance of preventing further yen depreciation.
However, in the economic and financial environment, where the interest rate differential between Japan and the United States is expected to widen, there will be strong pressure on the dollar to appreciate and the yen to depreciate. If there is no change, such as the emergence of cautious arguments about interest rate hikes within the US FOMC, it will be difficult for the dollar to shift to a weaker direction. Over the weekend, it was reported that Bullard and Daly should discuss when to peak and slow down rate hikes. Both are known to be dovish, and it’s unclear at this point whether the tide of rising U.S. Treasury yields will change.
At the beginning of the week, preliminary PMI figures (October) for Germany, France, the UK, the Eurozone, the United States, etc. will be announced, and no major economic indicators are scheduled to be announced. Fed officials are in a blackout period during which they refrain from commenting on monetary policy and the economic outlook.
Following Mr. Johnson, Mr. Mordaunt has also announced that he will withdraw from the next party leadership election in the chaotic situation in the UK. Former Finance Minister Sunak will become the party leader and prime minister. politically stable.
The Bank of Japan intervened again today, and the dollar/yen fluctuated. It is assumed that the BOJ’s seriousness is gradually penetrating the market, and that the topside can be suppressed.
Today, $2 billion options exist at 150.00, limiting upside. I am thinking from a sales point of view.