LDN - Business

Shares rise, yen surges on suspected intervention

[April 29, 2024] By Harry Robertson and Rae Wee

LONDON/SINGAPORE (Reuters) -The yen jumped sharply against its peers on Monday after it slid past 160 per dollar earlier in the session, with traders citing dollar-selling intervention by Japanese banks.

Meanwhile, European stocks and U.S. futures rose as investors looked towards the Federal Reserve's latest decision on Wednesday and U.S. jobs data on Friday.

The Japanese currency strengthened about 2% from the initial 159 per dollar level in a matter of a few minutes during Asia hours, as some traders said they had seen selling of dollars onshore.

The rapid move came just a few hours after the yen tumbled to the weaker side of 160 per dollar for the first time in 34 years.

"It does look like intervention," said Francesco Pesole, currency strategist at ING. "The recipe, hitting that mark of 160, then it looks like a big chunk of intervention delivered at 5 a.m. (London time)... it just makes sense at this point."

He added: "It’s a very busy week for markets. I suspect that they might have intervened today and then hoping that data in the U.S. and the Fed does not turn too much in favor for the dollar."

The dollar was last down 1.59% at 155.83 yen, after falling to an intraday low of 154.54 in early European trading.

Japan's top currency diplomat Masato Kanda told reporters: "I won't comment now" when asked if authorities had intervened.

In the broader markets, Europe's Stoxx 600 index was up 0.33% after rising 1.7% last week for its first weekly gain in a month. Germany's DAX was 0.21% higher while the British FTSE 100 rose 0.43%.

Investors were digesting the latest national euro zone inflation data, including Spanish figures which showed price growth ticked up to 3.4% in April. Data for the bloc as a whole is due on Tuesday.

U.S. stock futures were also higher, with those for the S&P 500 up 0.22% and for the Nasdaq up 0.34%.

Japan's Nikkei 225 stock index rose 0.81% while China's CSI 300 climbed 1.11%.

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A man walks under an electronic screen showing Japan's Nikkei share price index inside a conference hall in Tokyo, Japan June 14, 2022. REUTERS/Issei Kato/File Photo

"Sentiment is upbeat at the start of the week, fuelled by relief that inflationary pressures in the U.S. aren't as bad as feared, and hopes return that a ceasefire could be negotiated in the Middle East," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Markets rallied on Friday as Big Tech gains lifted Wall Street and closely watched inflation data came in as expected on a month-on-month basis.

The focus of investors on Wednesday will be on whether the Fed strikes a more cautious tone about rate cuts after a string of stronger-than-expected data derailed market expectations on the timing of the first reduction. U.S. nonfarm payroll jobs data will give more clues about the economy on Friday.

Market pricing shows traders now think the first rate cut will come in November, from a June start only a few weeks ago, with 35 basis points worth of easing expected this year.

The prospect of rates staying higher for longer has lifted U.S. bond yields and boosted the dollar, although both were lower on Monday.

U.S. 10-year Treasury yields were down 3 basis points to 4.64%, down from a six-month high of 4.739% last week.

Against the dollar, the euro rose 0.27% to $1.0721. The dollar index fell 0.33% to 105.61, though was headed for a monthly gain of 1%.

Brent crude fell 0.72% to $88.88 a barrel as news of a potential Gaza ceasefire eased fears of supply constraints. [O/R]

A Hamas delegation will visit Cairo on Monday for talks aimed at securing a ceasefire, a Hamas official told Reuters on Sunday, as mediators stepped up efforts to reach a deal ahead of an expected Israeli assault on the southern city of Rafah.

(Reporting by Harry Robertson in London and Rae Wee in Singapore; Editing by Bernadette Baum)

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