Yen Squeeze Sparks Intervention Speculation
The Japanese yen has surged to its highest level in recent history, sparking speculation about potential intervention. The move began early yesterday and continued into today, with the dollar falling against the yen from around JPY159.70 to almost JPY158.20. Some analysts suspect that this could be a result of official intervention, but others believe it may have been a rate check, possibly at the request of the US Treasury.
According to preliminary reviews of the Bank of Japan's balance sheet, there is no evidence to suggest that they intervened yesterday. The dollar trended lower throughout the European morning today, but the price action was smooth and not spiky, unlike what typically occurs during intervention.
The yen's strength has spilled over into other markets, with the euro rising to $1.1615 and sterling reaching a low near $1.3475. The Canadian dollar gained 0.4% following a hawkish hold by the Bank of Canada, while the New Zealand dollar lost 0.7%. The greenback posted an outside day against the Canadian dollar, falling below CAD1.3840 before recovering slightly.