EUR/JPY bounces to 183.40 after dropping to 182.05 in a suspected intervention

EUR/JPY returns to 183.40 following a nearly 300-pip decline to 182.05 in an alleged intervention.
Japanese Finance Minister Katayama had warned against speculative Yen moves earlier this week.
Eurozone HCOB Services PMI and PPI figures are due later on Wednesday.

Guillermo Alcala FXStreet

The Euro (EUR) has dropped sharply against the Japanese Yen (JPY) on Wednesday, falling from levels just below 185.00 to 182.05 before returning to 183.40 at the time of writing. Similar moves in other Yen crosses point to another intervention of the Japanese Ministry of Finance (MOF).

Japanese authorities do not comment on interventions, but data released by the Bank of Japan (BoJ) last week shows that the MOF might have spent 5.48 trillion Yen (USD 35 billion) in boosting the JPY last Thursday, and a former Japanese official warned about further action during the Japanese Golden Week holiday.

Furthermore, the Japanese Finance Minister, Satsuki Katayama, reiterated her warning against speculative Yen sellers earlier this week. Katayama assured that Tokyo will take “decisive measures” against speculative moves, in accordance with the statement signed with the United States last year, at the annual meeting of the Asian Development Bank celebrated in Uzbekistan.

On the macroeconomic front, the German and Eurozone final HCOB Services Purchasing Managers Index (PMI) figures for April and the Producer Prices Index (PPI) data from March will provide the fundamental background for the Euro. In Japan, the Labor Cash Earnings and the minutes of the BoJ’s latest monetary policy meeting will be observed during Thursday’s Asian session for further insight into the central bank's rate hike calendar.

Economic Indicator

HCOB Services PMI

The Services Purchasing Managers Index (PMI), released on a monthly basis by S&P Global and Hamburg Commercial Bank (HCOB), is a leading indicator gauging business activity in the Eurozone services sector. As the services sector dominates a large part of the economy, the Services PMI is an important indicator gauging the state of overall economic conditions. The data is derived from surveys of senior executives at private-sector companies from the services sector. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the services economy is generally expanding, a bullish sign for the Euro (EUR). Meanwhile, a reading below 50 signals that activity among services providers is generally declining, which is seen as bearish for EUR.

Economic Indicator

BoJ Monetary Policy Meeting Minutes

The Bank of Japan publishes a study of economic movements in Japan after the actual meeting. These meetings are held to review economic developments inside and outside of Japan and indicate a sign of new fiscal policy. Any changes in this report tend to affect the JPY volatility. Generally speaking, if the BoJ minutes show a hawkish outlook, that is seen as positive (or bullish) for the JPY, while a dovish outlook is seen as negative (or bearish).

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