Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Japan signals new “line in the sand”
The US dollar was lower across markets overnight after Japanese authorities finally reacted to the red-hot rally in the USD/JPY and intervened in FX markets.
The Ministry of Finance took the opportunity of a Japanese national holiday to enter the market after the USD/JPY hit 160.00 on Monday with the wave of selling forcing the pair all the way back to 154.50.
The USD/JPY later rebounded to end down 1.3% for the day at 156.35.
While the MoF refused to confirm or deny any intervention, both the Wall Street Journal and Dow Jones News Wires reported the move was led by Japanese authorities in off-the-record interviews.
Greenback lower after Japan move
The sharp move lower in the USD/JPY ricocheted through FX markets and forced the greenback lower across the board.
The commodity currencies outperformed, with the AUD/USD up 0.5%, the NZD/USD up 0.7%, but the USD/CAD was flat as crude oil fell.
The euro and British pound were moderately higher.
In Asia, the big move lower in the USD/JPY drove losses in key regional markets.
The USD/CNH fell sharply, down 0.4%, as it again rejected topside resistance at 7.28-7.30.
The USD/SGD lost 0.2%.
Euro to be tested by CPI release
In a busy session for FX markets, today’s main event is likely to be Eurozone inflation due at 7.00pm AEST.
The European Central Bank is currently seen as mostly likely to be the next major central bank to cut interest rates. A lower inflation number tonight could confirm that view and drive the EUR lower.
Otherwise, China’s economy will be in focus with a sequence of PMI number due with official numbers for manufacturing and services due at 11.30am and the private sector Caixin manufacturing PMI due at 11.45am.
Otherwise, Australian retail sales and the US’s employment cost index are also released today.
USD lower after invention
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 29 April – 3 May
All times AEST
*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
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