Intervention talk lifts the yen off 160 as the kiwi falls on its hike

Suspected Japanese intervention gave the yen its best session in weeks and knocked USD/JPY back off 160.00; the New Zealand dollar got the rate hike it wanted and fell 1.45% anyway; and the dollar handed back an early gain as the yen surged.

Major currencies

• The Japanese yen had its best session in weeks, and nobody has confirmed why. USD/JPY had touched a fresh high since 31 July above 160.00 in the Asian session on global bond yields, and MUFG noted markets moved to fully pricing a 25 basis point Bank of Japan hike on 18 September, up from the 92% we reported yesterday. The pair then slid to 159.65, down nearly 0.90% by the New York morning, with GBP/JPY off 1.10% to 214.08, its weakest since 10 August. No currency intervention has been confirmed — every wire reporting the move called it suspected, and Japan does not announce these operations in real time. The level is the confirmed part: 160.00 is where our weekly wrap said desks were placing the intervention risk.
• The New Zealand dollar is our weakest major, on the day it got exactly what it asked for. The Reserve Bank of New Zealand raised the official cash rate 25 basis points to 2.75%, the move TD Securities called in Friday's weekly wrap — where TD also gave the reason it would not help: it was bearish the kiwi exactly because the tightening was already priced. NZD/USD plunged 1.45% to around 0.5810, almost 1.7% from top to bottom. The same weakness pushed AUD/NZD to a thirteen-year high near 1.2250, which makes that a New Zealand story rather than an Australian one.
• The Canadian dollar tops our strength gauge, and it started the day at fresh two-week lows. The Bank of Canada left its overnight rate unchanged at 2.25%, exactly as priced, but the press conference did the work: the wires ran Governor Tiff Macklem saying multiple rate increases should not be ruled out. USD/CAD slipped 0.15% to around 1.3875. Two central banks decided in the same session and went opposite ways, because a rate decision only moves a currency as far as it was not already priced. Section 338 duties take effect on 8 September, and Canada's jobs report is tomorrow.
• The dollar spent the session handing back an early gain. The dollar index reached 99.86, its highest since 14 August, carried there by bond yields at multi-year highs, before the yen move dragged it to around 99.55 and 0.11% lower on the day. The data gave it nothing: private payrolls from Automatic Data Processing (ADP) rose 38,000 in August against a 47,000 forecast, with July revised up to 46,000. The hike bets held regardless, MUFG counting 17 basis points priced for the 16 September meeting.
• Elsewhere the calendar did the talking. Sterling hit a three-week low just under 1.3500, with Bank of England Governor Andrew Bailey speaking tomorrow. The euro holds near 1.1590 and the European Central Bank is seven days out, its Joachim Nagel putting the market's odds of a September hike above 95%. The Swiss franc sits at monthly lows before inflation data this morning.

Geopolitics & commodities

• Gold made a round trip of more than $100 and finished it higher, bottoming at $4,282 during Asian hours — its lowest in nearly a month — before the surging yen and a selling dollar carried it to around $4,385. The $4,700 ceiling our weekly wrap named is long behind it; the level that matters now is $4,300, where TD Securities puts the systematic trend-followers' selling threshold. Yesterday the story was a metal that would not rally on a war at an oil chokepoint. Today it rallied on a currency.
• WTI crude eased to around $88.70 in European hours after two sessions of gains, then swung both ways while holding near a six-week high. Iran's Islamic Revolutionary Guard Corps claimed two more tankers had been disabled by mines in the Strait of Hormuz — its own claim rather than an independent report.
• President Trump said the renewed campaign against Iran "won't continue for too long", while adding he is prepared to strike again at any time — and the same wires still had Iran tensions supporting the dollar. Separately the White House claimed "the biggest oil deal in world history", putting US majority control over more than 65 billion barrels of Venezuelan reserves. The figures and the framing are its own.

Key events today

• 06:30 CHF CPI m/m: SCHEDULED (forecast 0.0%, previous -0.1%)
• 12:30 USD Unemployment Claims: SCHEDULED (forecast 205K, previous 203K)
• 14:00 USD ISM Services PMI: SCHEDULED (forecast 54.2, previous 54.1)
• Nothing High-impact lands today, and Waller, Hammack and Goolsbee all speak. Tomorrow is the big one: US non-farm payrolls at 12:30 UTC, forecast 55K after a previous print of -23K, alongside Canadian employment and Governor Bailey.

Market metrics

• Our MRS jumped 22 points to 63, its highest reading at this hour since 24 August — every roundup is generated at 01:00 UTC, so the series compares like for like. The news component recovered from 2 to 18 out of 20 once yesterday's Australian national accounts passed; the sub-score keeps the lowest reading among imminent events, so a rising number means event risk receding. The volatility component moved too: the ATR score went from 4 to 11, its first move in seven of those readings — our gauge registering yen crosses at two-week lows and a $100 round trip in gold. The FSI sits at 67, still Greed, and the CTS ticks up a point to 80. The weakest slot has now gone to seven different currencies in seven sessions.