The dollar-yen rebound trend appeared to remain intact in the New York market, but the pair did not make a one-way move above ¥160. The market is reacting nervously to intervention concerns and option-market positioning.
In today's New York foreign exchange market, the yen strengthened rapidly during London hours, with dollar-yen at one point falling from the low ¥157s to the ¥156 range, but the pair moved back into the ¥157 range after the start of NY hours. While the market grew increasingly wary of intervention, no actual intervention-related information had emerged, and buying back nevertheless took the lead.
Although the rebound trend remains intact, the market has not reached the point of testing ¥160 in one move, leaving a cautious tone around further upside. In the options market, there has been activity to prepare for a future decline in dollar-yen, and some observers have pointed to concerns about intervention by the Japanese authorities, particularly in the short-term zone.
During the long holiday period for Japanese market participants, there are fewer participants in the yen market, and ordinary market signals remain difficult to discern. There has been no conspicuous rush to hedge in either direction. While weekly technical indicators show an excessively bearish condition, the candlestick chart is showing a bullish engulfing pattern, heightening signs of a rebound market.
Euro-dollar fell temporarily to around $1.1430, and market attention is focused on whether it will test below $1.14. Euro-yen fell into the ¥179 range before holding in the ¥180 range. Short-term factors, including policy developments in the UK and at the ECB and the outlook for the September meetings, are expected to be intricately intertwined.