Instant View: Yen jumps against the dollar, traders alert to Japan intervention

Instant View: Yen jumps against the dollar, traders alert to Japan intervention LONDON, July 30 : The yen rose sharply against the dollar on Thursday, in a move so rapid and large in its scale that it alerted traders to the prospect of intervention by Japan to prop up its weak currency. Markets have been on alert for yen-buying by Japanese authorities, who have warned of action for months as currency weakness exacerbates the cost-of-living impact of rocketing energy import prices. The yen is trading near 40-year lows against the dollar, pressured by Japan's relatively low interest rates and as higher energy prices hit the nation's terms of trade. Dollar/yen was last trading at 158.61, down almost 3 per cent on the day. The yen also jumped against the euro, sterling and Australian dollar. COMMENTS: NEIL JONES, MANAGING DIRECTOR OF FX SALES AND TRADING, TJM, LONDON: "The 400 point sell off in the U.S. dollar-yen strongly suggest further official MOF intervention to me. The yen is outperforming across the board. This is more than just a weaker dollar." YUJI SAITO, EXECUTIVE ADVISOR, SBI FX TRADE, TOKYO: "This is clearly different from the kind of move you see when rate checks are conducted. Looking at the chart, the upside was capped two or three times before the dollar started falling. Given the circumstances, it is reasonable to think that intervention was likely conducted." "The key question is whether authorities will keep pushing until the dollar breaks below the 155-yen line. We want to gauge that as just how serious the government is about defending the currency." ROBERTO COBO GARCIA, HEAD OF G10 FX STRATEGY, BBVA, MADRID: "There has been a sharp move lower in dollar/yen that strongly suggests official intervention. The pair has broken below the 161 level, and it appears Japanese authorities have taken advantage of the bearish momentum generated by the weaker U.S. data to sell dollars and support the yen." JUAN PEREZ, DIRECTOR OF TRADING, MONEX USA, WASHINGTON "The yen is a steady-Eddy type of asset. So when in one day, the intraday change, is over 1 per cent, almost 2 per cent as it is in front of me right now, that means that there's some sort of intervention." FRANCESCO PESOLE, CURRENCY ANALYST, ING, LONDON: "My personal feeling is it looks like an intervention but that's nothing more than my personal feeling. The size of the drop is generally a decent indicator, secondly there was no other massive driver, and the third indication is it wouldn't be out of the ordinary for the BOJ to intervene in such an environment because they have shown a preference to intervene after a dollar negative event — as we had with the Federal Reserve." "So, I wouldn't be surprised at all if it were intervention, perhaps trying to reduce the risk around the BOJ tomorrow in case there is some disappointment."