Dow Jones & Nasdaq 100 Hold Gains Amid Yen Intervention Risks

USD/JPY Hits 10-Month High, Raising Intervention Risk

Stronger-than-expected nonfarm payrolls sent USD/JPY to a 10-month high of 157.893 on Thursday, November 20. However, rising unemployment and resilient year-on-year wage growth sent mixed signals, fueling uncertainty about a December Fed rate cut.

According to the CME FedWatch Tool, the probability of a December cut rose from 30.1% on November 19 to 35.6% on November 20, but remains below 50.1% on November 13.

Ongoing concerns about Prime Minister Sanae Takaichi’s fiscal stimulus plans, uncertainty about a Bank of Japan rate hike, and fading bets on a Fed rate cut have sent USD/JPY deep into the intervention zone.

While a weaker yen typically fuels carry trades, rising intervention risk could stem flows into risk assets.

Japanese Data Fails to Lift the Yen

Japanese economic data failed to reboot expectations of a December BoJ rate hike, despite inflation edging higher.

Export growth cooled in October, rising 3.6% year-on-year, down from 4.2% in September. Imports increased just 0.7% YoY in October, down sharply from 3.0% in September, signaling weakening domestic demand, potentially weighed down by the weaker yen.