Zhitong Finance APP learned that the Bank of Japan is suspected of interfering in the foreign exchange market again, which made the yen remain strong on Monday. The pound fluctuated as former Chancellor of the Chancellor of the Chancellor of the UK became the leader of the next Prime Minister of the UK. The yen hit a low of 149.70 in early Monday, and then suddenly rose to 145.28 in a few minutes, indicating that the Bank of Japan, on behalf of the Japanese Ministry of Finance, had intervened in the foreign exchange market for the second consecutive day. As of press time, the US dollar against the Japanese yen was 148.96.
(From: UK financial situation)
Westpac senior foreign exchange strategist Sean Wallow said: "The yen trend is expected to worry Japan's Ministry of Finance because it shows that demand for buying on the US dollar/yen is strong. The timing of intervention was originally good. After the Wall Street Journal reported on Friday, the yield of US bonds was still falling."
The report said that Fed officials may discuss the scale of rate hike in the future, fueling speculation that the Fed may turn around, driving US stock to rise on Friday and falling US bond yields.
Sources said Japan also intervened in the forex market on Friday, confirming its purchase of the yen for the second time in a month after the yen hit a 32-year low around 152. This triggered the yen to rise by more than 7 points to 144.50.
Damien Boey, chief macro strategist at Barrenjoey, Sydney investment firm, said the yen is still not close to fair value . He noted: "When I run some parity conditions and evaluation models for the US dollar/JPY, I get some very crazy results, such as the fair value may be 170. This just shows how important it is for the US to push the US dollar back because what the Bank of Japan is doing cannot achieve results."
traders also suspect that the Bank of Japan has intervened in the foreign exchange market on other occasions in the past month to support the yen that has fallen 22% against the US dollar this year.
The Japanese economy faces the " ternary paradox ", which leads to it interfering in the bond and foreign exchange markets at the same time. Regarding this issue, Goldman Sachs analysts said: "While this policy combination is not ideal and unsustainable in the medium term, we think it may exist for a while."
USD 0 also showed an increase against other major currencies, with the USD index rising 0.3% to 112.24. The euro fell 0.2% to 0.9831, and the pound was also pulled higher as former Prime Minister Johnson exited the campaign, which rose 0.2% to 1.1320 in the late trading.
In addition, the Australian dollar fell 0.7% against the US dollar to 0.6330, while New Zealand dollar also fell 0.3% to 0.573 against the US dollar.
