Yen's wild ride has markets nervous

A look at the day ahead in European and global markets

By Ankur Banerjee,  Asia Finance & Markets Breaking News Correspondent

Data refreshes every time you open this email. For more European market news, click here. Please send any feedback to morningbid@thomsonreuters.com.

The Japanese yen is set to hog the limelight again as the spectre of the first joint U.S.-Japan currency intervention in 15 years looms large, although investors are none the wiser on ‌when and how authorities may step in.

The volatile spikes on Friday have been followed by a much more orderly gallop on Monday, taking the yen to a four-month high of 153.81 per U.S. dollar from as low as 159.23 on Friday.

Japanese Yen and U.S. dollar banknotes are seen in this illustration taken March 10, 2023. REUTERS/Dado Ruvic/Illustration

Sources told Reuters on Friday the New York Federal Reserve contacted traders ‌to check rates, often a precursor to an actual intervention. But markets also focused on the U.S. collaboration and have been broadly selling the dollar through Asian hours.

That kind of a big yen move without an actual intervention speaks to investor skittishness and relatively ‍light positioning, with traders possibly unwinding short yen position lest they get in the way of authorities stepping into the market.

Top Japanese authorities said on Monday they have been in close coordination with the United States ⁠on foreign exchange.

The yen's move has cast a pall over global markets, dragging the U.S. dollar ‍lower and pushing some of the struggling Asian FX, including South Korean won , higher. The strong yen weighed ‌on ‌the Nikkei (.N225), opens new tab, which slid about 2%.

Precious metals, buoyed by safe-haven flows due to growing geopolitical rifts, also got a lift from the soft dollar as gold breached $5,000 per ounce for the first time and silver surged over 4% to another record high.

Markets are also awaiting a Federal Reserve ⁠meeting later in the ⁠week where the central bank is expected to stand pat on rates although much of the focus will be on concerns over central bank independence.

U.S. President Donald Trump has repeatedly criticized Fed Chair Jerome Powell for not lowering rates ‍more aggressively and the Justice Department has now threatened a criminal investigation against Powell related to building renovations on the Fed's new headquarters.

Trump's attempt to remove Fed Governor Lisa Cook also awaits a Supreme Court hearing.

In corporate news, earnings from Ryanair (RYA.I), opens new tab will be of interest to investors as ‍it comes amid a social-media feud between Elon Musk and Ryanair boss Michael O'Leary.

Graphics are produced by Reuters.

Graphics are produced by Reuters.