Suspected Japanese Foreign Exchange Intervention
April 29, 2024
The yen initially plunged overnight to as low as 160.3 per dollar, but suspected foreign currency sales by the Japanese government yanked it back to 156.3 for a net gain of 1.2% from Friday’s closing level. Although not surprised, investors had been surprised Friday when the Bank of Japan chose not to raise interest rates further. The overnight yen low was its weakest point since April 1990 but still less than half its strongest quote in September 2011.
Official dollar sales against the yen also softened the U.S. currency against other currencies overnight, with drops of 0.6% relative to the kiwi, 0.5% versus the peso, loonie and Aussie dollar, 0.4% vis-a-vis sterling and 0.3% against the euro and Swiss franc.
Ten-year sovereign debt yields have dropped seven basis points in France, six bps in Germany, Spain and Italy and four bps in the United States and Great Britain. The 10-year Japanese JGB yield, by contrast, is holding steady.
Asian stock markets experienced a strong session, closing up 1.3% in India, 1.9% in Taiwan, 1.2% in South Korea, 1.7% in Indonesia, and 0.8% in Japan and China. U.S. stock futures are up modestly, but European share prices are generally listless, depressed by Euroland’s weaker-than-expected economic sentiment reading.
The price of Bitcoin sank 1.3%, while gold and oil remain generally steady.
Economic sentiment in the euro area fell 0.6 points to a 2-month low in April, including 45-, 5- and 2-month sectoral lows in the industry, retail and service sub-indices. Construction and the labor market softened further, and consumer inflation expectations continued to recede. A rate cut at June’s European Central Bank policy review looks plausible.
Consumer sentiment in the euro area in April was its least negative in 26 months, that is since Russia invaded Ukraine.
German consumer price inflation in April matched the 34-month low of 2.2% seen in March despite the biggest monthly increase in 11 months.
Belgian CPI inflation rose further to an 8-month high of 3.4% in April, extending a rebound from November’s 34-month low of 0.4%.
While total Spanish CPI inflation edged up 0.1 percentage point to a 3-month high in April, core inflation slowed 0.4 percentage points to a 27-month low of 2.9%.
Finnish consumer sentiment this month slipped to a 4-month low. Portuguese consumer sentiment improved to a 26-month high.
Dutch business confidence rebounded from a 3-month low in March to a 3-month high in April.
First-quarter GDP growth was reported in a few European economies today ahead of tomorrow’s GDP figures for all of Euroland and most of its members.
- Swedish GDP fell 0.1% on quarter and 1.1% from the first quarter of 2023.
- Latvian GDP rose 0.8% on quarter, trimming the on-year GDP decline to 0.2%.
- Irish GDP advanced 1.1% last quarter but was 0.8% lower than a year earlier.
Turkish economic sentiment dropped back from March’s 9-month high o a 2-month low this month.
Copyright 2023, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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