Read on the Trading Floor - 29 April 2024
Today’s focus… BoJ, Powell, Tesla and much more
Macro Themes At Play
Theme 1 - No Comment
Theme 2 - Big week for US data
Theme 3 - Consumer Data + JV's + Price War + Tariffs = EV Market
Further reading and listening of note
Theme 1 - No Comment
Wellington open + local holiday = prime conditions for a nervous USDJPY market to trigger 160.00 in thin conditions. Having printed through, we're now back to bouncing around the 156.00 handle. The erratic moves that we've seen since the BoJ meeting on Friday, with big figures changing within minutes, will only bring us closer to sustained action from local authorities (BoJ to hike 15bps in July, 25 more in Oct?).
MOF have a reputation to be excellent US economists. They may look to slow the one-way march higher in USDJPY, limit Yen's deprecation to 10 handles per month but how can they sell USD into rising global yields, steeper curves and most importantly a Fed pivoting from their Nov pivot as sticky inflation and resilient activity data pushes the first Fed cut towards 2025. Atlanta GDPNow is forecasting Q2 growth at 3.9%, these are not the same economic conditions as Q4 2022.
Kanda's long weekend was interpreted by reporters looking for confirmation that it was indeed them. He declined to comment on whether they had sold USD. He did say “we cannot overlook the negative impact that excessive and abnormal FX fluctuations driven by speculation are having on the nation’s economy. So, we will continue to take appropriate measures as necessary.”
Japanese authorities release their intervention volumes at the end of each month, however any actions within a few business days of month end can be left to the following month. As a result, tomorrow's data set may not show us their true activity and it will in fact be the end of May before we know if it was them or just an erratic holiday move to knock out key options strikes in thin liquidity.
WSJ - Japanese Authorities Intervened in Forex Market to Support Yen
Weston Nakamura - Is This Yentervention?
Steno Research - Trade Alert: Stopped out of JPY in the turmoil..
Nikkei Asia - Yen strengthens sharply after dropping past 160 to the dollar
Bloomberg - Japan Opts to Keep Traders in Dark on Whether It Intervened
Brent Donnelly am/FX - MOF and HG
ZeroHedge - Intervention Or Not, Yen Bears Will Stay Confident
Source: Tradingview.com