From Marc to Market:
In holiday-thinned markets, the dollar is mostly softer as North American leadership is awaited. In light of yesterday’s surge in the yen, and contrary to our expectation, it does appear that Japanese officials materially intervened yesterday. The intervention may have been for around $34.5 bln (~JPY5.4 trillion), which if accurate, would be larger than the average size of the intervention operations in 2024. Better confirmation will likely be available at the end of next week.
Five G10 central banks met this week. The derivatives market adjusted expectations for this year’s course the 22 bp for the Bank of Canada. Two hikes are now fully discounted. There was a 19 bp increase in the implied year-end target rate for the European Central Bank, where three hikes are now fully discounted. The Bank of England’s hawkish hold saw the expected year-end base rate rise 15 bp to 68.5 bp. The Federal Reserve remains the only major central bank expected to cut rates, but the futures market has a little more than a basis point is discounted, down from nearly a dozen basis points at the end of last week....
....MUCH MORE
