Euro flatlines against Japanese Yen as intervention risks rise
The EUR/JPY cross holds steady around 180.25 during the early European trading hours on Monday. Japan markets are closed for a three-day holiday, leading to low liquidity. Traders remain on high alert for currency intervention from Japanese authorities to prop up the volatile currency. The Bank of Japan (BoJ) decided to raise its policy rate by 25 basis points (bps) to 1.25%, the highest level since 1995, as widely expected. However, a lack of explicitly hawkish guidance disappointed markets, weighing on the Japanese Yen (JPY) against the Euro (EUR). Swaps markets have priced in less than 20% for the next policy meeting at the end of October, with 90% odds of a rate increase priced in for the December policy decision. The Nikkei newspaper reported that Japanese officials conducted rate checks. A rate check involves authorities asking banks for currency quotes to gauge market conditions, which traders view as a precursor to currency intervention. On the Euro front, European Central Bank (ECB) President Christine Lagarde said that any further interest rate hike by the ECB “will depend on the future.” She added that the central bank would decide “meeting by meeting” what is appropriate, whether that is to hold, increase, or cut interest rates,
