A second yen surge sinks the dollar and gold tests $4,500

A second session of yen buying, on hawkish Bank of Japan signals and renewed intervention talk, started the dollar's slide; a conditional hold from the Fed's Christopher Waller finished it, taking the dollar index under 99.00 and through its 200-day average, while gold rallied more than 2% past $4,500.

Major currencies

• The Japanese yen strengthened for a second consecutive session, and the wire gives it two drivers rather than one. Commerzbank and ING both name hawkish Bank of Japan guidance alongside renewed intervention talk; separately, Bloomberg reported the BoJ is leaning toward a quarter-point rise to 1.25% at the meeting ending 18 September. USD/JPY was near 156.80 by European hours, 155.40 by the New York morning and 2.07% lower on the day, and sits around 155.75 in Asia this morning. No currency intervention has been confirmed: one desk describes a rate check by Tokyo, and Atsushi Mimura only repeated that authorities remain ready to act. BNY now reads 160.00 — the level Friday's weekly wrap put on the watchlist — as a practical intervention ceiling. GBP/JPY fell more than 300 pips, touching 210.60, its lowest in a month.
• The dollar was on the other side of it all day, and Washington finished the job. The dollar index was already near 99.40 in early European hours as Treasury yields slipped from multi-year highs, then slid below 99.00 to around 98.90, down 0.67% and breaching its 200-day moving average, after Federal Reserve Governor Christopher Waller said he is inclined to support holding the policy rate at the 15-16 September meeting if August inflation data confirms prices are cooling. That is a conditional hold rather than a cut, and it was dovish enough to trim hike bets. The data gave it nothing either way: ISM services printed 55.4 against a 54.2 forecast, and jobless claims 206K against 205K.
• The Swiss franc is our strongest major on an intraday basis, and yesterday's roundup left it at monthly lows waiting for exactly this. August CPI rose 0.4% on the month against a flat forecast and 0.8% on the year against 0.5%, with petrol prices named as the driver — the oil story arriving inside an inflation print. The desks split: BBH reads it as reinforcing Swiss National Bank hike expectations, Societe Generale says it leaves SNB expectations unchanged. USD/CHF fell around 0.80% to near 0.8065, breaking its 50-day average.
• Sterling held its 50-day average just under 1.3500 for a second session and trades near 1.3530, helped by Bank of England chief economist Huw Pill backing a rise in Bank Rate to 4.00% rather than waiting for Middle East energy prices to resolve; Governor Bailey speaks this morning. The euro is flat near 1.1625, six days out from a European Central Bank meeting where all 65 economists in a Reuters poll expect 25 basis points to 2.50%. The Australian dollar rose a third straight day to about 0.7210, USD/MXN eased to 16.92, and the Canadian dollar holds below 1.3800 near a two-week low after a hawkish read of the Bank of Canada, with its jobs report today and Section 338 duties due on 8 September.
• The New Zealand dollar added about half a percent to just under 0.5900, recovering most of the decision-day fall it took on Wednesday with no New Zealand data behind it, and it is still our weakest major on an intraday basis for a second session running. That ends the run of seven different currencies in seven sessions we reported yesterday.

Geopolitics & commodities

• Gold rallied more than 2% and pushed past $4,500 during American hours, trading near $4,470 this morning, carried by the falling dollar and a pullback in Treasury yields. Yesterday we named $4,300 as the level that mattered, TD Securities' selling threshold for systematic trend-followers; gold bounced off $4,280 on Wednesday and has not been near it since, and TD now says the metal has moved away from those triggers. The open question was whether $4,300 would cap gold or floor it. It floored it.
• WTI crude ran to just under $91.00 at its session high, close to 10% up on the week, before easing to around $89.50 in Asian hours. The US military escorted tankers through the Strait of Hormuz this week.

Key events today

• 08:50 GBP BOE Gov Bailey Speaks: SCHEDULED
• 12:30 USD Non-Farm Employment Change: SCHEDULED (forecast 55K, previous -23K), with Average Hourly Earnings m/m at 0.3% against 0.1%
• 12:30 USD Unemployment Rate: SCHEDULED (forecast 4.1%, previous 4.1%)
• 12:30 CAD Employment Change: SCHEDULED (forecast 15.1K, previous 75.1K), with the unemployment rate seen holding at 6.4%

Market metrics

• Our MRS added two more points to 65, a second consecutive rise and its highest reading at this hour since 21 August — every roundup is generated at 01:00 UTC, so the series compares like for like. The news component is back at its maximum of 20, but that sub-score keeps the lowest value among imminent events, and at 01:00 the payrolls print is eleven hours away: it will fall as the release approaches. The ATR score holds at 11 for a second session. The FSI slips a third straight session to 66, still Greed, and the CTS, our carry trade gauge, is unchanged at 80.