Yen Hovers Near Intervention Zone as Middle East Risks Loom

Author: Kemal Ilgaz…

Yen Hovers Near Intervention Zone as Middle East Risks Loom

The Japanese yen hovered close to its May low against the U.S. dollar on Wednesday, near levels that spurred Japanese currency intervention in recent weeks, as traders weighed the risks of a renewed flare-up in the Iran war.

Safe-Haven Dollar Remains Firm

The safe-haven U.S. dollar remained firm after renewed U.S. strikes on Iran. The dollar index (DXY) was little changed at 99.082, while the euro (EUR/USD) edged up to $1.1642.

New Zealand Dollar Jumps on RBNZ Hawkish Hints

The New Zealand dollar (NZD/USD) jumped 0.7% to $0.5876 after the Reserve Bank of New Zealand (RBNZ) held rates steady but signaled that hikes may need to come sooner and by more than previously envisaged. The RBNZ's decision was split, with Governor Anna Breman casting the deciding vote.

Australian Dollar Falls on Cooler Inflation

The Australian dollar (AUD/USD) slipped 0.1% to $0.7159 after data showed annual inflation cooled to 4.2% in April, below expectations of 4.4%. Traders now price only 20 basis points of rate hikes for the remainder of the year.

BOJ Governor Kazuo Ueda struck a hawkish tone, warning that the war-driven oil shock could become persistent. Markets see around 70% odds for a quarter-point hike at the BOJ's June 15-16 meeting.

Impacted Symbols

Symbols affected by this headline and their sentiment signals

EURUSDNeutral

Euro/US Dollar

Euro edged higher against the dollar but the news has no direct impact on euro. General dollar strength limits euro.

Impact score30%

USDJPYNegative

US Dollar/Japanese Yen

Yen is near intervention zone and under pressure due to Middle East risks. Despite BOJ rate hike expectations, the energy crisis keeps the yen under pressure.

Impact score85%

DXYPositive

U.S. Dollar Currency Index

Safe-haven dollar remains firm due to geopolitical risks in the Middle East and US strikes on Iran.

Impact score70%

NZDUSDPositive

NZD/USD

New Zealand dollar jumped 0.7% after RBNZ's hawkish signals and rate hike expectations. The central bank is expected to raise rates sooner.

Impact score80%

AUDUSDNegative

AUD/USD

Australian dollar fell after April inflation came in below expectations at 4.2% annually, reducing rate hike expectations.

Impact score75%

8301Neutral

Bank of Japan

BOJ Governor Ueda's hawkish comments and June rate hike expectations exist, but the energy crisis and weak yen keep the decision uncertain.

Impact score50%

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