This week is filled with various US employment-related indicators, with Friday’s employment data leading the way. Yesterday’s US Job Openings and Labor Turnover Survey (JOLTS) showed a surprisingly significant increase, driving up US bond yields and pushing USD/JPY above the significant 150 yen level. However, right after that, it rapidly dropped to the upper 147 yen level. This seemed like an intervention. Subsequently, it was quickly bought back to around 149 yen, where it stands now.
The strength of US employment indicators points to persistent inflation in the US through wage pressure. If this series of employment-related indicators remains strong, it could easily lead to an increase in US bond yields and overall dollar-buying pressure. Today, we have the US ADP Employment Report and ISM Non-Manufacturing Purchasing Managers’ Index (PMI), followed by initial jobless claims tomorrow, and the highly anticipated official US employment report on Friday. It’s shaping up to be a tense week. However, amid the increased anticipation of intervention, the market’s moves may be somewhat restricted, and speculative traders might temporarily retreat. Detailed figures regarding the intervention will only become clear at the end of the month when statistics are published, leaving room for speculation until then.
While the Bank of Japan has been avoiding direct statements, yesterday’s movements in USD/JPY clearly suggest intervention. It seems that they want to prevent USD/JPY from crossing the 150 yen threshold. However, the intervention’s effects have been limited, with USD/JPY remaining in the upper 149 yen range. Despite an attempt to encourage yen buying in CHF/JPY, as you had anticipated, it seems that yen buying didn’t materialize.
All eyes are on tonight’s developments.