As the Japanese yen experienced a significant jump on Thursday, traders speculated that it was a result of dollar selling triggered by disappointing U.S. consumer inflation figures rather than intervention by Tokyo authorities.
The dollar plummeted by 2.1% to 158.3 yen, with the yen strengthening against various currencies, including a 1.2% drop in the euro to 173.26 yen.
Expert Analysis on the Yen's Surge:
Kenneth Broux, Head of Corporate Research FX and Rates at Societe Generale: Broux dismissed the idea of intervention as the cause of the yen's rise, attributing it to stops being triggered by the U.S. CPI data.
Steve Englander, Head of Global G10 FX Research and North America Macro Strategy at Standard Chartered Bank NY Branch, New York: Englander highlighted the impact of rate differentials and position clean-up on the dollar/yen pair due to the definitive U.S. data, leading to a shift in market sentiment.
Lee Hardman, Senior FX Strategist at MUFG, London: Hardman pointed out that abrupt moves in the market occur when positions are heavily skewed in one direction, such as the overextended dollar/yen long positioning.
Colin Asher, Senior Economist at Mizuho, London: Asher suggested that the surge in the yen was likely driven by short covering amid speculation of upcoming U.S. rate cuts following the negative CPI print.
Analysis:
The surge in the Japanese yen against the dollar was fueled by weak U.S. consumer inflation data, leading to a significant drop in the dollar's value. Experts believe that the movement was primarily driven by market dynamics rather than official intervention. Traders should monitor the impact of this currency movement on their portfolios and consider adjusting their positions accordingly to navigate the changing market conditions.