Daily Alert – Friday 3rd May 2024: BoJ intervenes again?

Mark NugentDaily Alert, May 2024

Daily Alert – Friday 3rd May 2024: BoJ intervenes again?

Good afternoon.

Well, the Fed held rates at 5.25% to 5.50% as expected. Fed Chair Powell said rates would stay “higher for longer”, again, but also said he does not see a hike. The immediate market reaction was to go on a “daytrip” where equities, the USD and the 10-year-yield moved briskly, and then turned right around and ended up where they had started. However, since the announcement, and on a more measured trajectory, the USD and the 10-year-yield have been falling and equities have been rising.

The falling USD and what looks like the second market intervention by the Bank of Japan (BoJ) in a week have caused the Yen to strengthen and the USDJPY to fall back to the level at which the bank said it would intervene. So, job done? Well, maybe. The move is at least in part driven by USD weakness. That won’t last forever, so we may well see USDJPY move back into the danger zone and prompt further BoJ market manipulation, sorry, orderly intervention.

I almost traded USDJPY short on Wednesday night but was put off by reasons I discuss in the video. Shame, the trade would have made around 3%. Oh well, it was never my money.

Today saw both US Average Earnings and Non-Farm Payroll miss to the downside.

That’s it from me. It’s a bank holiday on Monday so I will be back on Tuesday. Have a great weekend.

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