Headlines:
- Japan looks to finally draw a line on the yen freefall
- Japan financial authorities reportedly intervened in the FX market
- Japan top currency diplomat says will take appropriate action against excessive FX moves
- Japan top currency diplomat says will not comment on intervention
- ECB's Wunsch: July rate cut is not a done deal
- Bavaria April CPI +2.5% vs + 2.3% y/y prior
- Spain April preliminary CPI +3.3% vs +3.3% y/y expected
- Eurozone April final consumer confidence -14.7 vs -14.7 prelim
Markets:
- JPY leads, USD lags on the day
- European equities mixed; S&P 500 futures up 0.2%
- US 10-year yields down 4.5 bps to 4.624%
- Gold up 0.2% to $2,341.61
- WTI crude up 0.2% to $83.85
- Bitcoin down 2.5% to $62,308
It is all about the yen to start the new week, as Japan finally intervened to hammer down JPY pairs. It came roughly at 1pm Tokyo time with USD/JPY taking a tumble from 159.60 to 158.00 initially. The move then gathered pace in a drop to 157.20 before subsequently dropping all the way down to 155.05.
That invited volatile swings in the currency with USD/JPY itself running back up to 157.00 before being hammered down again to 154.50 on the day. The drop was a brief one though as the pair then settled around 155.70-90 levels mostly before running back up to 156.20 at the moment. USD/JPY itself is still down 1.3% on the day with the dollar being the laggard and is now down near 400 pips from the highs in Asia.
Other major currencies were seen higher against the dollar, pushing back after the greenback failed to impress following the US Q1 GDP and PCE price data last week. GBP/USD is up 0.3% to 1.2530, USD/CAD down 0.2% to 1.3645, and AUD/USD up 0.5% to 0.6560. The latter is keeping up a solid bounce over the last week, culminating in a test of its 100-day moving average at 0.6584 earlier.
In other markets, stocks are also keeping steadier for the most part. European indices are sitting more mixed though, consolidating after recouping some losses last week. Spanish stocks are lagging after PM Sanchez said that he won't be stepping down. Meanwhile, US futures are sitting a little higher with month-end set to come into focus as well.
In the bond market, yields are down across the board with traders eyeing the Fed later this week. 10-year yields in the US are down near 5 bps to 4.62% but it keeps in the realms of what we saw since last week.
For the time being, all eyes will be on the yen. Now with US traders coming in and liquidity conditions picking up, will Japan be bold enough to quell any further dip buying on the day?
