USDJPY breaks >149 & moving towards 150 handle
Current JPY intraday volatility is driven by foreigners crushing JPY, more so than domestics buying USD.
This week (post-Sept BOJ), JPY trades ~flat during hours, but then gets sold down right after
session close, when traders come in This is also evident in different market reactions to intervention talk today:
- Japan AM, MoF’s Suzuki commentary of “concern + sense of urgency” on FX (as always, though this time even PM Kishida himself engaged in public JPY jawboning) – & to fairly muted market reaction
- Japan late PM session (after JPY futures drop on $100mn notional of foreign selling at open thru USDJPY > 149), Suzuki makes a second round of FX comments for the day→ JPY futures short squeezed higher on $416mn notional volume Bloomberg: Japan Warns Again on Yen After Dollar Breaches 149 Mark https://bloomberg.com/news/articles/2023-09-26/japan-warns-again-on-yen-after-dollar-breaches-149-mark?srnd=premium&sref=7rs7ieH4…
- Also note that JPY futures shorts for the recent USDJPY upside are coming from asset managers- levered funds are actually reducing their net short positions as intervention risk rises. That said, hedge funds still have a net short JPY position on- but this gradual short JPY exiting is reducing the impact of a massively sharp intraday 5-big-figure short cover rally if/when officials intervene in markets.
