Japan's Thin Market Raises Speculation of Intervention in USD/JPY
The Japanese market is closed on Monday, and traders are left wondering if the Bank of Japan will intervene to prop up the yen. The US dollar has been gaining strength against the yen in recent days, with a rate gap between the two countries contributing to the pair's volatility. Rabobank's three-month FX forecast puts the US Dollar to Yen exchange rate at 154.00, below Friday's close near 156.88.
The Bank of Japan warned last week that an expected interest rate hike might not be enough to satisfy yen buyers. With Tokyo closed until Thursday, the yen is entering some of its thinnest trading periods this year. The lack of market activity in Japan could amplify any intervention-style drop in the US dollar to yen exchange rate.
The SNB policy decision and Australia's labor report are also on the calendar for this week. RBA Governor Bullock, BoC Governor Macklem, and several Fed speakers will add central-bank context to the market.