Yen Squeezes Higher as Dollar Weakness Spills Over to Other Currencies

The Japanese yen saw a sharp increase in value today, rising from around JPY159.70 to almost JPY158.20 in North American trading hours. Some analysts initially suspected intervention by the Bank of Japan, but a preliminary review of the BOJ's balance sheet suggests that Japan did not intervene yesterday. The dollar trended lower through European morning trade, but the price action was smooth and not spiky as intervention often appears.

The weakness of the dollar against the yen spilled over to other major currencies, with the euro reaching almost $1.1610 before settling at $1.1615. A large options expiration at $1.1625 may have contributed to the euro's strength today. Meanwhile, the Middle East hostilities continue, and October WTI crude oil is at a new contract high near $93.

The Canadian dollar saw a bigger lift from the Bank of Canada's hawkish hold than the New Zealand dollar did on the RBNZ rate hike and signal that another one is likely before the end of the year. The greenback posted an outside day, falling through Monday and Tuesday's low and briefly trading below CAD1.3840.

The Australian dollar continued to sell off despite Australia reporting slightly stronger than expected Q2 GDP yesterday. It reached almost $0.7120 in early North American trade before recovering to new session highs near $0.7175.