USD/JPY buyers did what was expected last night after Japan’s Finance Ministry ordered an intervention to weaken the pair: they bought the dip.
After falling to 153.00, the pair rose as high as 156.00 as bears piled up. However, the momentum stalled and slowly reversed, with the pair now trading at a US low of 153.55.
USDJPY 10 minutes
What’s behind the last lower leg?
This could be stealth and regular intervention or longer-term long USD/JPY positions (which have been very successful) deciding it is time to exit. Yesterday, the Fed was not hawkish and only 38 basis points of cuts are planned this year. The message could be that the FOMC will become more dovish as the data deteriorates.
This last point is also crucial. Tomorrow we receive the April nonfarm payrolls report and a weak reading would weigh heavily on the dollar, particularly if the unemployment rate rises from 3.8% to 4%. Second, USD/JPY dip buyers may be reluctant to get in the water until the risk of a non-farm payrolls event has passed. Additionally, they might also be wary of a redux of Treasury intervention later, similar to post-Fed intervention.
cnbctv18-forexlive
