Yen hangs under intervention cloud

A look at the day ahead in European and global markets.

View in Browser Sign up for Reuters newsletters Morning Bid Europe A look at the day ahead in European and global markets By Ankur Banerjee, Asia Finance & Markets, Breaking News Correspondent Data refreshes every time you open this email. For more European market news, click here. Please send any feedback to morningbid@thomsonreuters.com. The Japanese currency needed a fresh and sterner intervention warning from Tokyo on Wednesday to lift it off the one-year low touched after the central bank's policy tweak failed to excite yen hawks.   Masato Kanda, Japan's top currency diplomat, said authorities were on "standby" to respond to yen's recent "one-sided, sharp" falls, ramping up the rhetoric around yen-buying intervention - something the market has been on alert for in recent months. Today's Market News Asia's factories squeezed as China's nascent recovery teeters Evergrande proposes offshore creditors get 30% equity stake in subsidiaries How African apparel industry's future depends on US Congress Banknotes of Japanese yen are seen in this illustration picture taken September 23, 2022. REUTERS/Florence Lo/Illustration/File Photo New thresholds As Europe wakes up, the yen is not far off the one-year low of 151.74 hit this week and the three-decade low of 151.94 touched last year, which triggered an intervention by Tokyo at the time.   The broad yen sell-off on Tuesday came a day after the BOJ watered down its 1% yield cap on the 10-year bond. While economists saw that as an unambiguous sign the cap's day were numbered, markets saw it as insufficient to close the wide interest rate gaps that have kept the currency under pressure.   So how has the Japanese bond market reacted? The 10-year yield rose to 0.970%, a level last seen in May 2013, prompting the BOJ to announce an emergency bond-purchase operation to stall its march. It was last at 0.965%.   How hard the BOJ defends the so-called 1% reference will be the key question traders ask in coming days. Fed focus Meanwhile, the central bank focus shifts to the United States, with the Fed widely expected to stand pat on rates although comments from Jerome Powell will again take the spotlight as investors parse every word to gauge where interest rates are headed.   Markets have priced in a 29% chance of a 25 basis point hike in December and a 35% chance of a 25 bps hike in January, the CME FedWatch tool showed, with traders bracing for the Fed and Powell to keep another hike on the table.   With little on Europe's economic calendar, investors are likely to keep the focus on the Fed and yen. Futures suggest European stock markets are set for a higher open. Key developments that could influence markets on Wednesday: Economic events: UK S&P Oct PMI and UK Nationwide house price for Oct Earnings: GSK Graphics are produced by Reuters. Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. Sponsors are not involved in the creation of newsletters or other Reuters news content. Advertise in this newsletter or on Reuters.com Morning Bid is sent every morning. Think your friend or colleague should know about us? Forward this newsletter to them. They can also sign up here.   Want to stop receiving this newsletter? Unsubscribe here. To manage which newsletters you're signed up for, click here. Reuters Terms & Conditions and Privacy Statement © 2023 Thomson Reuters. All rights reserved. 3 Times Square, New York, NY 10036