Jury Out on Yen Before Crucial Jobs Data: 3-Minutes MLIV

Summary

The video examines the yen's recent intervention and its limited success, noting the yen remains above 155 after giving back half its gains. Focus then shifts to the upcoming US payrolls report as a key catalyst for the yen and Treasury markets. A weak number could support the yen, while a strong number could weaken it further and raise intervention risks, and could also push US Treasury yields higher as Fed rate hike expectations increase.

• Japan's yen intervention gave back half its initial gains, with USD/JPY stabilizing around 158.
• The intervention is viewed as partially successful: the yen moved away from mid-160s but did not break below 155.
• Uncertainty remains about US support and potential treasury market concerns tied to the intervention.
• The upcoming US payrolls report is the next major catalyst for yen direction.
• A weak payrolls number could push the dollar lower and support the yen, while a strong number could weigh on the yen and trigger another intervention.
• For US Treasuries, a strong payrolls print could spark a selloff, pushing yields higher as Fed rate hike expectations build.
• Japanese government bonds are also on edge, with yields near cycle highs.
• Market expects 80,000 for payrolls; a larger number could intensify the Treasury selloff and yen weakness.