Morning Call #106

Dollar rises slowly but steadily

The Dollar rose for five days in a row. On the one hand, the market interprets all US data bullish. On the other hand, the other currencies are also making it quite easy for the Dollar at the moment. The Sterling News yesterday afternoon could definitely go down in the history books:

DailyFX Team Live @DailyFXTeam

BOE' Bailey: - There is a window of opportunity for pension funds to rebalance. - My message to pension funds is that you have only three days to get this done $GBP

Central banks have been far too accommodating for far too long, but such attempts to quickly (“three days”!) correct this error will add to already elevated volatility. At least the Pound (1.1070 currently) is seeing some sort of relief rally above the big 1.1000 level after printing a low at 1.0924 this early morning. Again: “Hats off to whoever bought it down there.” (#103)

The Yen also continues to weaken. The pre-intervention low at 145.90 is history as of tonight. But the follow through is rather muted so far. Twitter was definitely in the cinema mood when the treshold broke:

FXStreet News @FXStreetNews

Breaking: USD/JPY teases Japan intervention on crossing 146.00 hurdle to renew 24-year high – by @FXStreetNews fxstreet.page.link/Ms7t #Breaking #USDJPY #BOJ #RiskAppetite #YieldCurve

fxstreet.page.linkBreaking: USD/JPY teases Japan intervention on crossing 146.00 hurdle to renew 24-year highUSD/JPY rises for the sixth consecutive day to refresh multi-year high. Rebound in Treasury yields, risk-off mood and the hawkish Fed bets favor bull

Matt Simpson @cLeverEdge

Grab your popcorn! #USDJPY has just popped above the MOF #intervention level and trades above 146 for the first time since 1998. Comments from the #BOJ and #MOF likely await.

zerohedge @zerohedge

USDJPY blowing out

But so far it's been up fewer pips than expected (146.42 at time of writing). There might still be time to escalate. As the Bank of Japan, I would not be in a hurry to intervene again. Let the market deal with the new levels first. The next important resistance is the aug1998 high at 147.63.

The Dollar Index (DXY) is slightly in the red today but still trading above the 113 level, which has been important several times. We'll see the US PPI data later. They could have a say in whether the Dollar can hold current levels. If the 113 holds, the DXY could continue higher. But I'm still keeping my hands off Dollar longs, which admittedly might be stupid.

Good luck,
Sebbo