Yen rallies on BOJ's unilateral yen buying intervention whilst Swiss Franc tumbled in post-SNB

Market Review - 22/09/2022 23:40GMT  

The Japanese yen rallied across the board on Thursday after monetary authorities intervened in the market for the first time since 1998. Meanwhile, the Swiss Franc tumbled after SNB raised rates by 75bps and exited the era of negative interest rates.  
  
Reuters reported the Japanese government has intervened in the foreign exchange market to sell dollars for yen to stem the Japanese currency's recent sharp falls, top currency diplomat Masato Kanda said on Thursday. "We have taken decisive action (in the exchange market)," he told reporters, responding in the affirmative when asked if that meant intervention.  
  
Versus the Japanese yen, dollar moved sideways before briefly rising to 145.40 and then falling to 143.53 on Bank of Japan's dovish hold. The pair then rose to a fresh 24-year peak at 145.89 in early European morning before tumbling sharply to 140.70 in Europe on intervention by Japanese authorities, then to session lows at 140.36 at New York open. However, price then pared its losses and staged a short-covering rebound to 142.48 near the close.  
  
Sources from Reuters, the Bank of Japan maintained its ultra-loose monetary policy and dovish policy guidance on Thursday, remaining an outlier among a wave of central banks raising interest rates to combat soaring inflation. As widely expected, the BOJ kept unchanged its -0.1% target for short-term interest rates, and 0% for the 10-year government bond yield by a unanimous vote.  
  
The single currency extended its overnight fall and fell to a fresh 20-year bottom at 0.9810 at Asian open before rising to an intra-day high at 0.9908 in early European morning. The pair then met renewed selling there and retreated sharply to 0.9813 in New York morning before trading sideways.  
  
The British pound remained under pressure in Asia after overnight selloff in post-FOMC and fell to a fresh 37-year trough at 1.1213 in early European morning. The pair then erased its losses and rallied to an intra-day high at 1.1365 (Reuters) in European morning before retreating sharply to 1.1242 in post-BoE trading before moving narrowly in New York.  
  
Further news from Reuters, the Bank of England raised its key interest rate to 2.25% from 1.75% on Thursday and said it would continue to "respond forcefully, as necessary" to inflation, despite the economy entering recession. The BoE estimates Britain's economy will shrink 0.1% in the third quarter - partly due to the extra public holiday for Queen Elizabeth's funeral - which, combined with a fall in output in the second quarter, meets the definition of a technical recession.  
  
Data to be released on Friday:  
  
Australia manufacturing PMI, services PMI, U.K. Gfk consumer confidence, Japan market holiday, France S n P manufacturing PMI, S n P global services PMI, Germany S n P manufacturing PMI, S n P global services PMI, EU S n P manufacturing PMI, S n P global services PMI, U.K. S n P manufacturing PMI, S n P global services PMI, CBI distributive trades, Canada retail sales, U.S. S n P manufacturing PMI and S n P global services PMI.