GBP Bid On BoE Readiness To Extend Bond-Buying, USD/JPY Past Prior Intervention Levels

Yen sellers forced their way through the pivotal Y145.90 level against the greenback, printed on Sep 22 when Japanese officials intervened in currency markets and re-tested yesterday. The initial foray above that figure was short-lived, but the rate posted another upleg at the Tokyo open. It continued to trade with bullish bias, despite the generally limited headline flow, touching a fresh 24-year high at Y146.39. USD/JPY 1-week implied volatility climbed to a two-week high.

• The move through Y145.90 put market participants on intervention watch. Officials stuck to their regular script, pledging to monitor FX moves with heightened urgency and take appropriate measures against excessive volatility. On the other hand, FinMin Suzuki suggested that the focus is on the speed of the moves rather than any specific levels.
• Early gains for the broader U.S. dollar facilitated the upswing in USD/JPY, albeit the BBDXY index pulled back into negative territory ahead of the London session. The U.S. data docket for the next two days includes a couple of key risk events, namely FOMC minutes (Wednesday) and CPI report (Thursday).
• Renewed greenback losses were driven by a spike in sterling crosses as the Financial Times reported that “the Bank of England has signalled privately to bankers that it could extend its emergency bond-buying programme past this Friday’s deadline."
• Further weakness in iron ore sapped some strength from the Aussie dollar. AUD/USD printed new cyclical lows at $0.6240.
• Other notable data releases today include UK economic activity indicators & EZ industrial output. Plenty of speeches are scheduled from Fed, ECB & BoE policymakers.