Dollar sinks vs. yen, BOJ intervention suspect ahead of weekend by Stocksak

© Stocksak. FILE PHOTO – This June 22, 2017 illustration photo shows a Japan Yen Note in front U.S. Dollar notes and British Pound Sterling coins. REUTERS/Thomas White/Illustration

By Saqib Ahmed Iqbal

NEW YORK (Stocksak), Friday: The dollar fell against the yen, recording its largest daily decline in two months. Traders and strategists believe that Japanese authorities may be present in the market to stem a slide of their battered currency.

The yen rose to 144.5 dollars per dollar on Friday before paring gains to trade up 1.4% at 148.195, its largest daily jump since August 10.

Karl Schamotta from Corpay in Toronto, chief market strategist, stated, “I think it is intervention.”

He said, “We are seeing lots and lots of dollar selling, and the yen almost moving vertically as shorts get squeezed,”

According to the newspaper, the Bank of Japan and Japan’s government carried out dollar-selling and yen buying interventions in the foreign currency market.

The Ministry of Finance in Japan declined to comment.

Mazen Issa (senior FX strategist at TD Securities in New York) stated that “it’s very clearly, the Ministry of Finance stepping into to sell dollar-yen.”

He stated, “They are trying very hard to defend their very simple policy.”

“A lot of people had been looking at 150 to see some type of intervention. They let it run to basically 152, and then the timing for their intervention occurred at a very volatile time, basically as London was about heading home for the weekend. It seems like it is designed inflict maximum pain on, they like the term, speculators,” Issa stated.

Friday’s Japanese finance minister Shunichi Suzuki stated earlier that authorities were dealing “strictly” with currency speculators, while Haruhiko Kuroda, Bank of Japan governor, said the central bank would be closely monitoring the impact of currency moves.

Friday’s gains put the yen on track to end a nine-week-long streak of weekly losses against its greenback counterpart.

The, which measures the strength of the greenback against a basket currency, was 0.7% lower at 1112.17 than the previous session’s high of 113.95.

The greenback was under pressure after a report claimed that Fed officials signalled greater unease about big interest rates rises to combat inflation. This comes as they prepare for another big rate hike in November.

The Wall Street Journal reported that Fed officials are aiming for another interest rate rise of 0.75 percent at their November meeting. However, some policymakers have started signaling their desire to slow down the pace.

The report stated that Fed officials will likely debate how to signal plans for a smaller increase in December.

The Federal Reserve’s hawkish stance, and strong demand for safe havens in the face of continuing uncertainty about the future outlook for the global economy afflicted by inflation, has helped the dollar rise strongly this year.

Despite its decline on Fed headlines, dollar index remains close to a two-decade high.

“It’s really difficult to bet against it the fact that Fed is going to have to continue being quite aggressive in its approach moving forward,” stated Bipanrai, North American head FX strategy for CIBC Capital Markets.

Rai stated, “That ultimately means that we still see dollar upside.”

The dollar weakness helped sterling 0.2% rise to $1.1261, while the outlook for the Pound remained uncertain. This is because Britain’s ruling Conservative party will be choosing the country’s third prime minster in two months, after Liz Truss resigned on Thursday.

Truss’s departure had caused the currency to leap up as high as 1% in the previous day.

News Source and Credit

Stocksak Editorial

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