Market Commentary: Strong JOLTS report sparks JPY intervention

Market Commentary: Strong JOLTS report sparks JPY intervention

Markets:

  • JPY leads, AUD lags
  • US 10-year yields up 11.7 bps to 4.80%
  • WTI crude oil up 77-cents to $89.59
  • Gold down $3 to $1824
  • S&P 500 down 1.3%, Nasdaq down 1.9%

The Japanese Ministry of Finance (MOF) faced pressure on Tuesday following a robust JOLTS report that triggered a widespread demand for USD and a further sell-off in bonds. Prior to the report, USD/JPY was positioned just below the 150.00 level, so when it surpassed this level, reaching 150.16, it wasn’t a significant surprise. Subsequently, Japan intervened by rapidly pushing the exchange rate down to 147.40.

The market now believes it has seen the MOF’s response, resulting in strong dip-buying activity and a rebound to 149.33. In the past few hours, the rate has retraced slightly, currently trading at 148.80.

Despite the MOF’s intervention in buying US dollars, it didn’t have a substantial impact on halting the dollar’s rally, as 10-year yields reached a new cycle high. AUD/USD experienced a sharp decline, reaching its lowest point of the year. Similarly, USD/CAD surged above the highs observed in April and September, reaching 1.3735, despite the gains in oil and natural gas prices.

EUR/USD also continued to decline, hitting 1.0449, although it fared relatively better compared to other currency pairs.

Late in the day, the US House voted to remove Speaker Kevin McCarthy, adding to the uncertainty in the market.

JOLTS job openings for August 9.61M versus 8.800M expected

  • Prior was 8.827m
  • Hires 5.8% vs 3.7% prior
  • Separations rate 3.6% vs 3.6% prior
  • Quits 2.3% vs 2.3% prior

This report is unlikely to be favorable for the bond market. The US dollar has gained strength against all major currencies as increasing evidence indicates the strength of the US job market.

Japan senior MOF official asked about intervention: No comment

A senior Ministry of Finance (MOF) representative, as reported by Reuters, declined to provide any statement regarding whether there was intervention at the 150.00 level earlier today.

In the past, the MOF’s intervention was verified through information from unnamed sources released on the news wires. We will remain attentive to any such developments.

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