GLOBAL MARKETS-Dollar sees saws on suspected yen intervention, shares rally


Stock markets in Asia :


Dollar buffeted vs yen by suspected BoJ intervention


Asian shares rallied on Wall St, key earnings


Stg firms as Boris Johnson bows out of PM race

By Wayne Cole

SYDNEY, (Reuters) – The US dollar went on a rollercoaster ride against the yen on Monday as markets suspected more intervention from Japanese authorities, while Asian shares rallied on the only hint of a slowdown in US rate hikes.

The dollar started in a bullish mood with an early rush to 149.70 yen, only to pull back to 145.28 within minutes. The dollar was last up 0.5% at 148.36 amid some wild swings.

The Financial Times reported that the Bank of Japan may have sold at least $30 billion on Friday in an effort to stem the yen’s weakness, which has suddenly raised the cost of imports, especially for resources.

Japanese authorities again refused to confirm whether they had intervened, but the price action strongly suggested they had.

Also moving is sterling, seen on the news that Boris Johnson has dropped out of the running for British prime minister.

The chance has increased that former finance minister, and the market’s preferred candidate, Rishi Sunak will win power and reduce the political uncertainty hanging over the pound, at least for a while.

The news initially saw sterling jump nearly a cent to $1.1402, and in late trading was up 0.2% at $1.1328 as investors awaited more clarity on the contest.

Equities extended a bounce that started late in New York on Friday on talk the Federal Reserve is debating when to slow the pace of hikes and could signal a step back at its November meeting.

Markets were still priced for a 75 basis point hike next month, but reduced bets on a matching move in December. The peak for rates also fell to around 4.87%, from above 5.0% early last week.

Only the prospect of a less aggressive Fed helped S&P 500 futures add 0.6% in Asia, while Nasdaq futures rose 0.8%.

MSCI’s broadest index of Asia-Pacific shares outside Japan grew 0.7%, while Japan’s Nikkei gained 1.2% and South Korea 1.5%.

Markets are now watching US gross domestic product data due on Thursday and core inflation measures the next day. The economy is estimated to have grown by an annualized 2.1% in the third quarter, while the Atlanta Fed’s GDP Now estimate rose to 2.9%.

Sentiment will also be scrutinized by some big earnings with Apple, Microsoft, Google-parent Alphabet and Amazon all reporting.

The European Central Bank meets this week and is widely expected to raise its rates by 75 basis points, though it is less clear whether it will signal a further such move in December. “While we do not expect any ‘dovish’ policy signal, we maintain a bias towards a lower rate path than markets are currently pricing,” analysts at NatWest Markets said in a note.

“We forecast +50bp in December and +25bp in early 2023 at a 2.25% peak,” they added “There is more uncertainty around QT, where the start of sales in Q1 2023 can be expressed.”

The euro was flat at $0.9849, having briefly touched as high as $0.9899 earlier in the session.

The prospect of a slowdown in US hikes also helped bonds pare some of their recent heavy losses, with the 10-year US Treasury yield at 4.21% compared to a 15-year peak of 4.337% in friday

Gold was another beneficiary, up 0.2% to $1,660 an ounce.

Also, oil prices rose with Brent rising 27 cents to $93.77 a barrel, while US crude rose 34 cents to $85.39.

(Reporting by Wayne Cole;)

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