June 4 (Reuters) - Markets should consider the risk of a double whammy from a Bank of Japan interest rate hike at the June 15-16 Policy Board meeting and possible FX intervention, given signs Prime Minister Sanae Takaichi may be on board for such moves. The prime minister said as much Wednesday, adding to the chorus from Ministry of Finance officials including Finance Minister Satsuki Katayama , . The market believes MOF is merely biding its time, waiting for the right moment, likely when it perceives the market has become sufficiently long USD/JPY and short the yen. USD/JPY has recently traded back to 160.00, touching 160.09 on Wednesday and early in Asia Thursday. The market, sensing heightened intervention risk, has for now resisted pushing USD/JPY higher during the Tokyo trading day. As for the BOJ, Governor Kazuo Ueda's hawkish comments Wednesdayappear to have cemented expectations of a 25-basis-point hike later this month . Ueda failed however to telegraph a move at the July 30-31 meeting, suggesting the government may not be on board for another rate hike so soon after a June tightening. This seems to be the quandary for Japan. In the absence of the BOJ telegraphing more rate hikes sooner rather than later, any MOF-ordered FX intervention would have only a limited and possibly very temporary impact, as was the case at end-April, early May.

Related comments , , , , , . For more click on [FXBUZ]

Bank of Japan benchmark interest rate:

Japan has recently had some success with currency interventions:



USD/JPY:

(Haruya Ida is a Reuters market analyst. The views expressed are his own. Editing by Sonali Desai)

• AUD/USD +0.1% Thur, activity subdued as markets calibrate Iran developments

• AU Apr balance on goods +1.79 bln (poll +1.8 bln), exports +7.2% m/m

• RBA officials Bullock, Hunter & Kent appear before Senate Committee 0500 GMT

• Iran war re-escalation keeps sentiment subdued, DXY +0.3% from Wed 99.19 low

• U.S. says Lebanon & Israel agreed to ceasefire, but markets remain sceptical

• AUD 0.7080-0.7200 channel tough to break without new catalyst

• Range Asia 0.7126-375, support 0.7080 0.6834, resistance 0.7200 0.7283
AUD Daily 55-DMA


DXY Daily 55-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• USD/JPY up to 160.09 EBS overnight, no Japan FX intervention - yet

• Market still on intervention watch however, Asia range so far 159.83-160.09

• Market obviously wary though probes higher will likely continue

• For now, profit-taking interest from longs, Japanese exporters up top

• Demand still eyed on dips however - from Japanese importers into Tokyo fix

• Institutional and retail specs bids likely too, foreign hedging interest too

• Latter could be less today with Nikkei off after TSE open, Wall St down o/n

• Higher US yields USD supportive, JGB-US Tsy rate differentials tad wider

• Massive option expiries on deck today, both above and below, from 158 handle

• On 159 total $11.4 bln, on 160 $5.8 bln, $3 bln alone at 160.00

• Likely on positioning ahead of US jobs report tomorrow

• BOJ Gov Ueda signalled rate hike late yesterday but already discounted

• Up to MOF to decide whether intervention warranted, plenty JPY shorts now

• US-Iran tensions still but signs of progress? More bluster?

• Related comments , , ,

• Also , Ueda-speak

• On Japan FX action ,

• US markets , , ,

• On US economy , , on Fed ,

• And , for more click on [FXBUZ]

USD/JPY:


USD/JPY nearby option expiries into next week:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• NZD/USD -1.1% from Thur 0.5935 high as flaring U.S.-Iran hostilities weigh

• U.S. strikes Qeshm Island & Iran hits Kuwait's airport in fresh engagements

• USD index +0.3%, WTI +1.9% to $95.30 a barrel and U.S. equities soften

• U.S. State Department says Lebanon & Israel agreed to ceasefire

• U.S. initial jobless claims due Thur, Reuters poll consensus 213k

• NZD nearing 0.5861 55-DMA, break below 0.5615 support will accelerate rout

• Range NZ 0.58585-74, support 0.5815 0.5680, resistance 0.5990-95 0.6012
NZD Daily 55-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

• AUD/USD -0.7% late Wed as Middle East war re-escalation dampens sentiment

• Iran hits Kuwait airport; U.S. strikes Qeshm Island; Israel attacks Lebanon

• DXY gains 0.3%, WTI +2.6% to $96.20 a barrel and U.S. equities soften

• AU Apr balance on goods due 0130 GMT, Reuters poll consensus +1.8 bln

• RBA officials Bullock, Hunter & Kent appear before Senate Committee 0500 GMT

• AUD trading towards lower hourly Bollinger band, downside momentum may slow

• Overnight range 0.7127-765, support 0.7080 0.6834, resistance 0.7200 0.7283
AUD Hourly Bollinger Study & DXY Daily 55-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)

JP Morgan flags a scope for further AUD/NZD gains on a daily close above 1.2134.

"Q1 GDP for Australia came in lower than expectations at 0.3%, which saw AUD underperform on crosses, although interesting not against the bird, with AUDNZD bouncing 40 points off the lows," JPM notes.

"If AUD/NZD can close above the 50D ~1.2134, this would suggest further gains towards the recent highs just below 1.2300," JPM adds.

• GBP$ soft in NY afternoon trade, -0.35% at 1.3418; NorAm range 1.3455-1.3416

• Mideast peace prospects dim as US, Iran trade hostilities, oil rises

• Front and long-end UST yields move higher as oil rise portends inflation persistence

• Ratewise, BoE indicated w/2-25bp hikes in 2026; Fed 80% odds for Dec 25bp hike

• USD slight bid as hawkish Fed a recent development; BoE in no hurry to hike

• For all the noise, GBP$ stuck in middle of recent 1.33-1.35 range awaiting news/data

• GBP$ supt 1.3416 Wednesday low, 1.3393 daily cloud base, 1.3344 lower 30-d Bolli

• Res 1.3451 bruised daily cloud top, 1.3477 100-DMA, 1.3509 daily high May 25

GB P Chart:


(Paul.Spirgel is a Reuters market analyst. The views expressed are his own)

• NY opened near 1.1615 after 1.1634 traded overnight, the pair fell in NY

• EUR/USD was weighed down by broad-based USD buying, USD/CNH neared 6.7820

• Rise in US yields , oil & wide spreads

added weight

• Drops in gold, silver and equities also weighed as those helped lift the USD

• EUR/USD broke the up trend line off the March 16 low, hit 1.1595, was down -0.29% late

• Techs lean bearish; pair below 10-, 21-, 55- & 200-DMAs; RSIs indicate downward momentum

• Head and shoulder pattern forming on monthly chart adds to bearish sentiment
eurusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

• NY opened near 0.7170 after 0.7182 traded overnight, drop extended in NY

• Broad-based USD buying, US yield & oil gains weighed

• The USD got an added boost from drops in gold, silver copper & equities

• AUD/USD fell below the 10-DMA, hit a 4-session low of 0.7130

• The pair held near that low late in the day, it traded down -0.67%

• Techs lean bearish; RSIs indicate downward momentum, pair below 10- & 21-DMAs

• Head & shoulder topping pattern forming on daily chart reinforces bearish signs
audusd


(Christopher Romano is a Reuters market analyst. The views expressed are his own)

ANZ Research updates its ECB rates call.

"We now expect the European Central Bank (ECB) to hike 25bp in June and September, taking the benchmark deposit facility rate to 2.50%. While the chance of resolution in the Middle East prior to the ECB's next meeting on 11 June has increased in the past week, the situation remains fluid. Even in the case of a deal being struck between the US and Iran, the tail of disruption in energy markets will extend in Europe for many months," ANZ notes.

"Policymakers have guided that the ECB remains data-dependent, but as the magnitude and persistence of the energy shock has moved further away from the baseline scenario for headline inflation laid out in March, there is an increasing focus on managing that at the ECB," ANZ adds.

Bank of America Global Research previews the US May jobs report on Fridayu.

"May Jobs: We look for another upside NFP surprise (95k forecast vs. 85k consensus) with risks to the upside, and an unchanged unemployment rate of 4.3%. Education & health should continue to lead, followed by trade & transport and leisure & hospitality," BofA notes.

"Fed: Comfortably on hold, in line with our forecasts. Recent Fed-speak has leaned hawkish, but we expect the U-rate threshold for hikes is closer to 4.0%.

FX: USD paralyzed by geopolitical headlines recently, but a strong report could reassert," BofA adds.

The market may revert to dip buying in USD/JPY as central bank risks loom and intervention odds remain high.

Fresh FX warnings pushed the pair toward its 159.37 Tenkan-sen, but large option-related gamma is limiting downside and helping anchor spot just below 160, supported by higher oil and Treasury yields.

While heavy short yen positioning, a flattening JGB curve, and softer technicals -- including a thinning daily cloud -- leave room for a pullback, a clear catalyst is lacking. Moreover, BOJ Governor Kazuo Ueda struck a cautious, mildly hawkish tone that offers limited support for sustained yen strength. While highlighting risks of inflation overshooting and falling behind the curve, he stressed the need to carefully weigh further tightening with policy still highly accommodative. This balanced stance echoes past messaging and aligns with government growth priorities, providing little conviction for a durable yen rally unless higher yields undercut risk sentiment. An extended move above 160 might invite MOF intervention, particularly if the yen weakens after an expected June BOJ hike. The options market is already pricing both that risk and a potential shift into a sustained 160+ range once expiries and key events pass. A close below 158 may be needed to arrest bullish sentiment.
yen


(Robert Fullem is a Reuters market analyst. The views expressed are his own.)

Societe Generale Research discusses the scope for further waves of intervention by Japan's MoF to cap USD/JPY upside.

"Neither rate trends, nor growth prospects are pointing to a sustained yen recovery yet. The Bank of Japan has now spent something in the order of USD 240bn in FX intervention to cap USD/JPY, since mid-2022. USD/JPY has averaged 147 over that period. Given that at that price the yen has been, on average, 35% undervalued relative to purchasing power parity, this represents a huge effort to avoid something that once upon a time, economists thought could only happen temporarily. The challenge for the MOF and BOJ, is that despite 2-year JGB yields rising to their highest level since 1996, that’s still 2.7% below Treasury yields. The 1-year yield differential has narrowed, from above 4% to below 2%, but it too, remains big enough to keep Japanese investors in Treasuries. There is, therefore, a danger that the current unstable equilibrium (super-cheap yen, rising Japanese yields) can be sustained for a while longer," SocGen notes.

"It is much easier to imagine a significant yen revival in the event of a protracted period of slow (or no) US growth, than in imagining Japan can grow fast enough to life the yen on its own. In short, for now, intervention to cap USD/JPY is likely to continue but hoping for a turn in the USD/JPY trend, back towards 150 and beyond, is unrealistic," SocGen adds.

Goldman Sachs Research previews the US May jobs report on Friday.

"We forecast a 60k increase in payrolls (vs. 89k consensus) in May. Big data indicators of job growth slowed, and government is likely to be a 5k net drag. We expect the unemployment rate to remain unchanged at 4.3%," GS notes.

"While continuing claims have fallen further, the unrounded unemployment rate was 4.34% in April, and the May unemployment rate appears to suffer from modest positive residual seasonality. We forecast a 0.4% increase in average hourly earnings, reflecting positive calendar effects," GS adds.

• Cable has traded a 22.5 pip range since the London open; 1.3439 is session low

• 1.3407-1.3485 marks the traded range since Friday (May 29)

• UK May services PMI upwardly revised to 49.3, from 47.9 flash estimate

• Five-year gilt yields rise to their highest level since May 22

• U.S. May ADP jobs data, ISM services index ahead; 117k and 53.8 forecast

• May 3, 2029 is one of the most likely dates for the next UK general election

GBPUSD


(Robert Howard is a Reuters market analyst. The views expressed are his own)

(Adds option expiry link to line 5 )

• EUR/USD is lacking volatility within limited ranges without a fresh catalyst, but options play their part, too

• Low volatility prompts option selling and adds more strikes to a zone already containing large amounts

• More strikes means more related cash hedging flows to offset exposure, which further restricts EUR/USD ranges

• There's been billions of euros of nearby expiry strikes expiring over recent sessions and more to come

• Wednesday has a massive 6.5 billion euros between 1.1600-55 for the 10-am New York cut expiry

• Thursday has 2.5 billion euros each at 1.1570 and 1.1600 and 6-billion euros between 1.1620-50, More Friday, too

• EUR/USD is leaning more bearish and options react, but still lacking conviction
EUR/USD FX option strkes expiring June 1-5


(Richard Pace is a Reuters market analyst. The views expressed are his own)

• Spot gold is edging closer to a critical support level, with a daily close below potentially opening the door to deeper losses

• The 200-day moving average sits at $4,417.54 (EBS), a level gold has not closed below since October 2023

• A fleeting dip below the 200-dma on May 28 saw prices bottom $4,367.40, before a swift recovery back toward the 21-dma at $4,595.10

• Despite the brief bounce, gold remains under pressure, trading within a narrow $4,496.20–$4,452.90 range on June 3

• With gold edging ever closer to the 200-dma, traders will be watching closely — a close below could signal a more significant shift in trend
XAU=EBS


(Richard Pace is a Reuters market analyst. The views expressed are his own)

• EUR/USD FX option implied volatility languishes at 2026 lows amid low FX realised volatility in limited range

• However, benchmark 1-month expiry just paid 5.125 from 4.95 Tuesday as spot setback aids support for now

• Risk reversals edge higher for EUR puts over calls too - 1-month 25 delta paid 0.35 Wednesday vs 0.25 Tuesday

• Shows market is growing more wary about EUR/USD losses and is increasing related option prices

• Demand for downside strikes increasing too - buyers of 1-2-week 1.1550 strikes noted early Wednesday

• However, prices and demand still low by comparison to spike highs at start of Mid-East conflict in early March

• Recall 1-month implied volatility reached 9.0 and 1-month risk reversals 1.5 for EUR puts over calls

• Hedging of more large FX option strike expiries may help to contain through 10-am New York cut expiry

• Related comment - USD/JPY options breakout warning as volatility premiums surge
EUR/USD FXO implied volatility


EUR/USD 25 delta risk reversals


(Richard Pace is a Reuters market analyst. The views expressed are his own)

• Yen languishes at key 160 level as Gulf hostilities boost dollar

• USD/JPY has risen from 159.82 to 160.00, on Wednesday, EBS data show

• Japan warns as traders push yen to intervention zone before key BOJ speech

• Finance Minister Satsuki Katayama signals readiness to act on FX

• USD/JPY options spike higher, poised for FX breakout

• An internal model shows USD/JPY should be trading well above 160

• Outlook technically bullish as spot continues to trade above the daily cloud

• The daily cloud currently spans the wide 156.59-159.04 region

• 30-day log correlation between USD/JPY and EUR/JPY is above +0.5 (pairs moving in tandem)

Daily Chart


Correlation Chart


(Martin Miller is a Reuters market analyst. The views expressed are his own)

• Cable falls to 1.3439 as higher oil prices on Gulf hostilities inflate safe-haven dollar

• 1.3439 is the lowest level since Monday (1.3407 was the low that day)

• Tuesday high was 1.3481. UK May final services PMI due at 0830 GMT; 47.9 forecast

• Hawkish Greene comments suggest she'll soon join Pill in voting for BoE rate hike

• Majority of MPC, including Bailey, look set to vote for BoE rate hold on June 18

• Warsh pledges to follow the best of Fed's traditions, while also looking for change

GBPUSD


(Robert Howard is a Reuters market analyst. The views expressed are his own)

• USD/JPY trades 160.00 - many exotic option barriers/triggers at that level now expired or knocked-out

• The related long gamma weighing option premiums and helping to contain FX, is now much reduced

• Implied volatility spikes from recent/4-year lows - benchmark 1-month expiry now 7.0 from 6.3

• Most telling is 1-month 10 delta butterfly spread from 1.2 to 1.6 - new high since 2022 (was 0.6 early May)

• Holders profit from USD/JPY breakout in either direction. Risk reversals strong bid for JPY calls over puts 1.2

• JPY calls benefit from lower spot and higher implied volatility - the USD/JPY spring is coiled
USD/JPY FX option implied volatility


USD/JPY spot and 1-month 10 delta butterfly spread


USD/JPY 25 delta risk reversals


(Richard Pace is a Reuters market analyst. The views expressed are his own)

• USD/JPY, JPY crosses back off from early Asia highs as longs booked profits

• USD/JPY from 160.00 early to 159.82 before steadying

• Japan FinMin Katayama FX intervention threat today taken more seriously

• That said, good demand on dips, Japan importers good buyers every Tokyo fix

• Specs also good buyers on dips after rallies

• Foreign investor hedging of Japan equity buys also tipped

• Technically, USD/JPY pulling away from 156.59-159.03 daily Ichimoku cloud

• Cloud also looking to taper, fall, to 157.86 over course of week

• Hourly chart shows support from 159.83 Ichimoku kijun, cloud 159.43-63 below

• Massive option expiries in area to help contain spot action ceteris paribus

• 159.00-70 total $1.2 bln, 159.75 $1.7 bln, 159.90-160.00 $901 mln

• EUR/JPY 185.92-186.00 EBS, at top of 184.39-186.14 daily Ichimoku cloud

• Like USD/JPY, EUR/JPY cloud to taper, fall to 184.95-185.03 over week

• Support from 185.80 hourly Ichimoku kijun, ascending cloud 185.45-63 below

• Some option expiries nearby today at 185.00, 185.40 strikes

• CHF/JPY 203.23 to 202.75, down more from 204.18 recent high May 29

• Pulling away from hourly Ichimoku cloud topside between 203.03-32

• GBP/JPY 215.06-37 and down from 215.52 high yesterday

• AUD/JPY too off some from 114.91 high yesterday, Asia 114.57-85

• NZD/JPY in lower 94.64-87 range after rally to 95.42 Monday

• BOJ Ueda to speak later today, could communicate rate hike

• In news, Japan finalised extra budget to subsidise surging fuel

• In data, Japan May services PMI 50.0, composite 51.1

• Nikkei index to fresh record high of 68,561.60, JGB yields up across curve

• Related comment , also ,
USD/JPY hourly:


Nikkei 225 daily:


Yield on JGB 2s - hourly:

(Haruya Ida is a Reuters market analyst. The views expressed are his own)

• Shares of 49 Metals rise as much as 32% to A$0.165, their highest since April 29

• Gold explorer discovers high grade gold at Gold Mountain project in Nevada, USA

• About 2.2 million shares change hands, 11.8x the 30-day average

• Stock down nearly 24.2% as of last close from March 31, its first day of ASX trading

(Reporting by Sherin Sunny in Bengaluru)

• AUD/USD -0.1% Wed after growth slows in Q1 and Middle East trouble flares

• AU Q1 real GDP +0.3% q/q (poll +0.5%), +2.5% y/y (poll +2.6%)

• RBA officials Bullock, Hunter & Kent appear before Senate Committee 0500 GMT

• Iran hostilities rekindled as U.S. intercepts regional missile attacks

• Israel's strikes on Lebanon continue U.S.-mediated partial ceasefire

• AUD unlikely to break 0.7080-0.7200 channel without fresh catalyst

• Range Asia 0.71715-815, support 0.7080 0.6834, resistance 0.7200 0.7283
AUD Daily 55-DMA

(James Connell is a Reuters market analyst. The views expressed are his own.)