A Week Where the Dollar/Yen is Tested by U.S.-Japan Coordinated Intervention and Employment Statistics — Why Domestic and Foreign Players Had Divergent Views
This Week's Major Schedule
The ISM Manufacturing PMI already released was 55.6, indicating quite strong activity.
However, the price index and supply delays were also strong. It would be unsafe to interpret the high composite index as a direct signal of overall economic strength. Here, we should interpret this as a dollar rally being driven by those factors, and this week we will monitor JOLTS, ADP, unemployment claims, and ISM Non-Manufacturing employment items while awaiting Friday's employment report.
Will Intervention Delay Rate Hikes?
The dollar/yen, which plunged to the 155 range due to coordinated intervention by Japan and the United States, has already bounced back to the mid-157s.
A view reported by Bloomberg from Societe Generale includes the following line.
"They have viewed FX intervention as a tool to curb the pace of BOJ tightening."
Intervention delaying rate hikes—the market seems to be reverting to selling the yen with this view.