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Free AccessUSD Plummets Amid Speculated Japanese FX Intervention, Fed Headlines
- The Dollar index made a new high for October at 113.94 in early trade on Friday and the initial strength was underpinned by USDJPY surging to a 32-year high of 151.95. However, some relatively dovish Fed speak, followed by speculated Japanese intervention in the currency markets sparked a steep greenback selloff, with the USD index plummeting around two percent from the day’s highs.
- WSJ reported that the Federal Reserve’s November meeting could serve as a critical staging ground for future plans, including whether and how to step down to a 50bp increment in December.
- The commentary prompted a sharp rally for the front end of the Tsys curve, in turn weighing on the greenback.
- While USDJPY had only initially dropped between 60-90 pips, the ensuing price action was extremely aggressive, prompting significant moves across the board. Over the course of around an hour, USDJPY traded from 151.50 to an intra-day low of 146.23. While there has been no official confirmation, with MOF officials declining to comment, Nikkei reports did refer to Japanese intervention in the FX market.
- The volatility reverberated across FX markets as a whole, with the USD index briefly slipping back below 112, a fresh weekly low after not long before trading at the week’s best levels.
- Approaching the close, USDJPY resides down 1.15% after bouncing back to 148.50 and is matched by a similar appreciation for AUDUSD, reflecting the strong recovery for major equity indices.
- Flash Manufacturing and Services PMIs will cross Monday. On the central bank slate, policy decisions are due from Canada, the ECB and the Bank of Japan next week.
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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.