LONDON (Reuters) – Japan’s yen rose sharply against the dollar on Tuesday in what market participants said on the surface bore the hallmarks of official Japanese intervention, but was more likely to be traders squaring positions after a break of the 150 level.
The yen strengthened to as much as 147.30 yen in minutes after breaking through 150 yen to the dollar for the first time in a year.
The 150 level is one that many traders suspect could mark the point at which Japanese authorities, who have reiterated their concern about excessive volatility and currency weakness, could intervene.
The Japanese Ministry of Finance and the Bank of Japan were not immediately available for comment. The New York Federal Reserve did not respond to requests for comment.
The dollar was last down 0.6% against the yen at 148.95 by 1433 GMT, having hit a session high of 150.165 earlier.
JAMES ROSSITER, HEAD OF GLOBAL MACRO STRATEGY, TD SECURITIES, LONDON:
“It quacks like a duck but I don’t think it is a duck. We are not seeing forceful moves. The level 150 is a pin-point for officials. Some investors may be jumping in before the Bank of Japan does and there may be stop-loss triggers being hit as well. But, it’s minute to minute at the moment, so let’s see what happens.”
KENNETH BROUX, HEAD OF CORPORATE RESEARCH FX AND RATES, SOCIETE GENERALE, LONDON:
“I think this is not intervention. The process is that they would they would check rates first. What makes sense is that there are a lot of options structures that have barriers at 150 – as that was such a psychological barrier, and so when you trade 150, as we did, those barriers get triggered and invalidated or validated and we are seeing flows on the back of that.”
JEREMY STRETCH, HEAD OF G10 FX STRATEGY, CIBC CAPITAL MARKETS, LONDON:
“I’m not sure it’s them (the BOJ) but the jury is out.”
“We broke the (150) level which got people a little bit nervous.”
“One of our traders thinks it was a bit of price checking rather than explicit action for now but it’s unclear.”
“Some people might think this was a shot across the bows from the BOJ.”
NIELS CHRISTENSEN, CHIEF ANALYST, NORDEA, COPENHAGEN:
“The market is obviously very nervous around these levels at 150. For me, it’s nervousness with traders cutting their long positions.”
“I imagine if this was intervention then they would confirm it to make the most of it. They would follow it up with more to really wash out the long dollar-yen positions.”
(Reporting by the London Markets Team; Compiled by Amanda Cooper; Editing by Dhara Ranasinghe)