US Dollar turns stable after volatile ride

LONDON (April 29) The US Dollar (USD) took it on the chin on Monday during the Asia-Pacific trading session. Although still unconfirmed, markets are speculating over the possibility that the Bank of Japan (BoJ) or its Ministry of Finance intervened in the forex market to support a rapidly weakening Japanese Yen (JPY). The USD/JPY pair slid lower from 160.17 to 154.50, a more than 3.50% appreciation of the Japanese Yen against the US Dollar. This sharp move had a ripple effect through the forex markets and saw the Greenback trading weaker across the board. 

On the economic data front, Monday presents a very calm start to the week ahead of the main event on Wednesday: the US Federal Reserve (Fed) convening for the Federal Open Market Committee (FOMC) meeting. The main element will be how Fed Chairman Jerome Powell perceives the current situation after some disappointing US economic data combined with signs of persisting price pressures.  

Daily digest market movers: Room for reversal

• Overnight, the Ministry of Finance from Japan or the Bank of Japan (BoJ) possibly intervened in the Japanese Yen, although there isn’t any official word about it. The move comes after the USD/JPY pair hit 160.00 in early trading on Monday. The BoJ intervenes by strengthening its currency in order to avoid having imported inflation from a weak currency, which could trigger more demand from abroad for goods produced locally. 
• At 14:30 GMT, the Dallas Fed Manufacturing Business Index for April will be released. The previous print was -14.4.
• The US Treasury will allocate a 3-month and a 6-month bill around 15:30 GMT. 
• Equities are overall in the green on Monday, cheering the weaker Greenback. Usually, when equities are underperforming, the US Dollar is stronger as an increase of safe haven demand.  
• The CME Fedwatch Tool suggests an 88.5% probability that June will still see no change to the Federal Reserve's feds fund rate. Odds of a rate cut in July are out of the cards, while for September the tool shows a 43.6% chance that rates will be lower than current levels.
• The benchmark 10-year US Treasury Note trades around 4.64% and keeps lingering around this level.

FXStreet