Yen rallies vs dollar after BOJ rate check, hints on intervention, U.S. PPI data
Reuters
Published Sep 13, 2022 09:04PM ET
Updated Sep 14, 2022 04:29PM ET
By Caroline Valetkevitch
NEW YORK (Reuters) - The yen rose 1% against the dollar on Wednesday after the Bank of Japan conducted a rate check in possible preparation for currency intervention, while investors digested U.S. producer prices data.
In a rate check, central bank officials call up dealers and ask for the price of buying or selling yen. However, actually intervening to support the currency would be a larger step.
Japanese Finance Minister Shunichi Suzuki told reporters on Wednesday that recent yen moves have been "rapid and one-sided", adding that yen-buying currency intervention was among the government's options should such moves continue.
"Most market participants are on pins and needles awaiting whether or not we're going to get any sort of intervention from the ministry of finance in Japan," said Bipan Rai, North American head of FX strategy at CIBC Capital Markets in Toronto.
"It's one of those things where we've seen comments so many times about the fact that they're watching and monitoring the yen. The fact that they did a rate check overnight kind of indicates we're in greater proximity toward intervention. But just intervention by itself we don't think is going to be all that successful outside of an immediate knee-jerk reaction."
The recent sharp gains in the dollar versus the yen have been tied to the hawkish stance from the Federal Reserve in raising interest rates to control inflation. The dollar hit a 24-year peak against the yen last week.
The dollar dropped against the yen right after news of the rate check. Nikkei website reported the rate check, citing unidentified sources, and Reuters later confirmed it with a market source. It was last down 1% at 143.19 yen, hitting a session low of 142.6 in the wake of the PPI data.
The dollar index, which tracks the currency against six main peers, was down 0.1% on Wednesday at 109.71, a day after registering its largest daily percentage gain since March 2020 on an unexpected rise in the U.S. consumer price index (CPI).
On Wednesday, investors weighed data showing U.S. producer prices fell for second straight month in August. It also showed underlying producer inflation rising moderately last month.
Financial markets now have fully priced in an interest rate hike of at least 75 basis points at the conclusion of the Fed's policy meeting next week, according to the CME's Fedwatch tool.
As inflation is a small concern in Japan, authorities are keeping yields on Japanese government bonds pinned down to help with the economic recovery. [JP/T]
The two-year U.S. Treasury yield, a bellwether for interest rate expectations, rose another 2.2 basis points (bps) to 3.778% Wednesday after jumping 18.5 bps on Tuesday following the consumer price data.
Get The News You Want
The euro was nearly flat against the dollar at $0.9972, while sterling was up 0.4% against the dollar at $1.1534.
The U.S. dollar was up 0.1% against the Swiss franc.
========================================================
Currency bid prices at 3:42PM (1942 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index
109.7100 109.8300 -0.09% 14.684% +109.9300 +109.2700
Euro/Dollar
$0.9972 $0.9968 +0.04% -12.28% +$1.0024 +$0.9956
Dollar/Yen
143.1850 144.6200 -0.99% +24.39% +144.9550 +142.5550
Euro/Yen
142.77 144.08 -0.91% +9.55% +144.4700 +142.3000
Dollar/Swiss
0.9634 0.9619 +0.12% +5.57% +0.9636 +0.9591
Sterling/Dollar
$1.1534 $1.1494 +0.35% -14.71% +$1.1589 +$1.1480
Dollar/Canadian
1.3182 1.3175 +0.06% +4.26% +1.3206 +1.3139
Aussie/Dollar
$0.6737 $0.6733 +0.06% -7.32% +$0.6760 +$0.6705
Euro/Swiss
0.9605 0.9583 +0.23% -7.37% +0.9628 +0.9582
Euro/Sterling
0.8643 0.8674 -0.36% +2.89% +0.8684 +0.8626
NZ
Dollar/Dollar $0.5998 $0.6000 -0.05% -12.38% +$0.6025 +$0.5978
Dollar/Norway
10.1085 10.1125 -0.16% +14.61% +10.1460 +10.0710
Euro/Norway
10.0811 10.0641 +0.17% +0.68% +10.1251 +10.0577
Dollar/Sweden
10.7112 10.6882 +0.18% +18.78% +10.7195 +10.6211
Euro/Sweden
10.6767 10.6570 +0.18% +4.33% +10.6946 +10.6369
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.