Dollar Drops Against Yen, Investors Suspect an Intervention has Taken Place

(CTN News) – Japan’s battered yen jumped against the dollar on Friday, triggering speculation that they’re trying to turn things around.

Yen rises to 144.80 per dollar in late U.S. trade, up about seven yen from a 32-year peak. Last night, the dollar/yen was down about 1.5% at 147.95.

COMMENTS

TD SECURITIES’ MAZEEN ISSA, SENIOR FX STRATEGIST

“This is the Ministry of Finance selling dollar-yen

“Just looking at some of their portfolios… looks like these are the assets they have on their balance sheet… you know, the securities portion of their balance sheet has been declining a lot, mostly Treasuries.

In light of some of the price action in fixed income markets this week, especially in the U.S. curve, it seems they’re probably going to sell Treasuries to fund any intervention..”

” They’re defending their easy policy vehemently.

“We’ve known for a long time, and there’s a lot of historical evidence, that forex intervention is temporary and not sustainable.”

“Today’s move was uniquely timed in that it followed the Wall Street Journal article about calibration risks.”

Secondly, many people were looking at 150 as a key level, and they let it run through to 152, and then the timing of their intervention was illiquid.

London was about to go home for the weekend, and the goal was to inflict as much pain as possible on, as they call it, “speculators.”

The finance minister last night talked about only talking about speculators. Thus, I think their timing is meant to hurt those trying to take top-side bets on the dollar-yen a week before the Bank of Japan meeting.

COLIN ASHER, SENIOR ECONOMIST, MIZUHO, LONDON

“If it’s intervention, it’s well timed after the Wall Street Journal article knocked the stuffing out of the ever-rising U.S. Treasury yields.”

KARL SCHAMOTTA, CHIEF MARKET STRATEGIST, CORPAY, TORONTO

“There’s a lot of dollar selling and the yen’s almost vertically moving as shorts get squeezed.”

“We’re hearing big blocks of money are being traded. This usually means bigger institutions are moving money or central banks are intervening in size.

The clearest evidence is just how much dollar selling is happening.”

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