- The yen jumped suddenly against the dollar on Monday, with traders citing yen-buying intervention by Japanese authorities to boost the currency that is languishing near 34-year lows. The dollar fell sharply to 155.01 yen from as high as 160.245 earlier in the day. Trade sources said Japanese banks were seen selling dollars for yen.
"Today's move, if it represents intervention by the authorities, is unlikely to be a one-and-done move. With FOMC and payrolls on the docket this week, we can likely expect more follow through from MOF if USD-JPY travels to 160 again. In a sense, the 160-level represents the pain threshold, or new line in the sand for the authorities.""With Japan on a public holiday, most were expecting a quiet day's trade.
"But market dynamics of wide UST-JGB yield differentials may suggest that intervention may not be as effective. Hence, a combination of BoJ demonstrating urgency to normalise policy and MoF conducting FX intervention may perhaps be more effective than the MoF doing a solo.
"If you're asking me how much further from here it can go. I don't have a number. We are in unchartered territory.""The extent of move looks like an intervention, although liquidity is thin so its still hard to draw any firm conclusions."
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