Breaking News
Investing Pro 0
Cyber Monday SALE: Up to 54% OFF InvestingPro+ CLAIM OFFER

Take Five: Intervention watch is here

Economy Sep 23, 2022 03:41AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. Banknotes of Japanese yen and U.S. dollar are seen in this illustration picture taken September 23, 2022. REUTERS/Florence Lo/Illustration
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio

LONDON (Reuters) - The yen is hogging the market spotlight after the Bank of Japan intervened to buy yen for the first time since 1998, while markets remain on watch for any signs of a ratcheting up in tensions between Russia and the West.

Election results from Italy, euro area inflation numbers and U.S. and Chinese data also give investors plenty to chew over.

Here's a look at the week ahead in markets from Kevin Buckland in Tokyo, Tom Westbrook in Sydney, Lewis Krauskopf in New York, Danilo Masoni in Milan, and Dhara Ranasinghe and Karin Strohecker in London. Graphics by Vincent Flasseur, Vineet Sachdev and Pasit Kongkunakornkul.


Japan's authorities finally had enough of a weak yen and intervened to stem a sharp decline against the dollar.

But will it work? The runaway greenback is up more than 20% on the yen this year, and some doubt it's got much left in the tank. But as U.S. rates rise, Japan's are stuck just below 0% and unlikely to budge.

So the case for a strong dollar remains. Japan, alongside neighbours China and Korea also pushing back on the dollar, may find itself fighting fundamentals, the market and the Fed.

Dealers in Seoul suspect authorities have already been selling dollars, but the won keeps sliding. Likewise, China's yuan has forged new lows although the central bank has pushed back via the trading band. Friday's China PMI readings, if disappointing, could add to the bear case.

Japan's history of supporting yen


Russian President Vladimir Putin's military mobilisation order, threats to use nuclear weapons and a push to annex swaths of Ukrainian territory mark a new stage in the seven-month old conflict.

The announcements - coinciding with the diplomatic highlight of the year that is the UN General Assembly meeting - were condemned globally and triggered fresh protests in Russia, where raft-age Russians headed abroad to escape Moscow's biggest conscription drive since World War Two.

The latest escalation has reverberated across markets: oil prices are sharply higher, raising the spectre of more pain on the energy front for Europe. Meanwhile, European Union foreign ministers are readying another package of sanctions - their eighth one - which could be formalised in mid-October.

Maps: Ukraine’s swift counteroffensive


The "flash" estimate of September euro area consumer price data is out on Friday and should show inflation at a fresh record high above 9%.

Investors have already ramped up expectations for another 75 bps, ECB rate hike in October, so the data shouldn't change the near-term rate outlook.

Yet any signs that underlying price pressures are broadening out, could further push up expectations for where rates in the bloc end up. The ECB is increasingly hawkish in its rhetoric and some ECB watchers say a mega 100 bps rate hike cannot be ruled out in coming months. Indeed, that's what Sweden's Riksbank just did, as did the Bank of Canada in July.

ECB ramps up fight against inflation


    Can the U.S. consumer defy sizzling inflation and rising borrowing costs? Tuesday's consumer confidence measure will indicate how this key pillar of the economy is holding up.

Last month, the Conference Board's overall consumer confidence index rebounded to 103.2, ending three straight monthly declines. This month's index is expected to come in at 104, a Reuters poll suggests.

In one positive sign, data earlier this month showed U.S. retail sales unexpectedly rebounded in August as Americans ramped up purchases of motor vehicles and dined out more thanks to lower gasoline prices.

    But with stock markets faltering and bond yields climbing, whether consumers remain upbeat is yet to be seen -- especially given a Fed intent on bringing inflation down even at the expense of a sharp slowdown in growth.

Testing times for U.S. consumers


When Italy last went to the polls in 2018, markets were rattled by anti-euro rhetoric from populist parties. Fast forward and there's little visible stress in markets as Giorgia Meloni's right-wing bloc looks set for a majority in both houses of parliament in Sunday's vote.

Her Brothers of Italy party traces its roots to a post-fascist movement. But Meloni, favourite to succeed Mario Draghi and become Italy's first female PM, has embraced an EU-friendly face -- reassuring investors.

Italy's 10-year bond yield gap over Germany has widened from the post-pandemic lows but is far from levels seen in 2018. Still, the size of Meloni's grip on parliament will be watched closely. Investors may welcome a solid majority that falls short of the two thirds needed to change the constitution, which could cause instability. How a new government navigates an energy crunch that is pushing highly-indebted Italy into recession will also be under scrutiny.

Mind the gap

Take Five: Intervention watch is here

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email