From Marc to Market:
The Federal Reserve’s reluctance to take action despite pledges to respect the inflation target, which has not been met in over five years, put the dollar under pressure. Then yesterday, it appears that Japanese officials may have intervened in the foreign exchange market, and as was the case earlier this year, the Federal Reserve reported checked on prices and indicated they were doing so at the request of the US Treasury. If true, it illustrates a notable difference between Japan, which tries to overwhelm the market with size (intervention and the BOJ’s balance sheet expansion), while the US tries finesse. Still, the MOF’s decision to intervene, and a preliminary review of the BOJ’s balance sheet suggests intervention involved selling almost $53 bln was not matched by the BOJ itself, which not only did not raise interest rates but shaved this year’s core inflation projection.
After the large moves in the foreign exchange market between the FOMC and MOF/BOJ, the currency market is mostly confined to narrow ranges (except the yen where officials have injected volatility), with most pairs not seeing any follow-through action. Oil prices are firm, but September WTI is poised to snap a three-week 30% surge. Chip and AI stocks are back in favor, with surges in the Japan, South Korea, and Taiwanese markets today. The Nasdaq looks poised to gap higher....
....MUCH MORE
