This slot covers two and a half days, because nothing published here since Friday lunchtime and the market has had a weekend in between. Here is what the weekend did. On Friday, Iran offered to reopen the Strait of Hormuz within seven days, crude fell about two percent, Japan’s finance minister issued her second intervention warning, and dollar-yen travelled 202 pips from 158.95 to 156.93. On Saturday, the US president rejected the Iranian plan outright. Crude has taken back four fifths of Friday’s fall on the Monday open. Dollar-yen has taken back 47 pips of 202. The reason for Friday’s yen rally has been formally withdrawn and the yen has kept almost all of the rally. That gap is the only thing worth looking at this morning.
The arithmetic of the gap
Take the two markets side by side. Brent settled Friday at 104.32 dollars a barrel, down 2.28 on the day; on the Monday Asian open it is 106.14, up 1.82. That is 79.8 percent of the fall recovered. West Texas Intermediate settled at 92.41, down 2.20, and is 93.55 on the open, up 1.14 — 51.8 percent recovered. Both barrels have repriced the rejection.
Dollar-yen has not. Friday’s low was 156.93 and Tokyo opens at 157.06 to 157.37 on one reader at 06:00 JST and 157.39 on another at 07:15. Call it 47 pips off the low, 23 percent of Friday’s range, against 80 percent in the barrel that Hormuz actually governs.
There are only two readings of that and you should decide which one you are trading before London arrives. Either the oil channel was never the main driver of Friday’s yen move — in which case the finance minister’s warning did more work than the market gave it credit for, and the yen is holding a gain it earned on its own. Or Tokyo simply has not repriced yet, the correlation reasserts itself during the European morning, and the 47 pips becomes 150. The first reading says the floor is real. The second says you are short the dollar into a gap that is about to close. We do not know which, and we are not going to pretend the number tells us.
Which barrel, again — and this time the weekly signs are opposite
On 24 September this desk published that Brent and West Texas Intermediate must be read as two instruments on this story, because the closure is structurally about seaborne cargo and one of those two barrels has to get on a ship. We had them 11.54 apart and argued the spread was the story.
The week just ended is that argument confirmed from the other direction, and more cleanly than we could have asked for. Across the week, Brent rose 0.45 dollars, or 0.43 percent, from 103.87 to 104.32. West Texas fell 7.89 dollars, or 7.87 percent, from 100.30 to 92.41. Same week, same headlines, opposite signs. The Brent-West Texas spread went from 3.57 dollars to 11.91 — it widened by a factor of 3.34 in five sessions.
If you carry a single oil input in a correlation filter, that filter had a 7.87 percent weekly decline and a 0.43 percent weekly gain available to it depending on which series you happened to wire in, on a week when the oil story was the dominant macro story and the yen was the pair it fed into. That is not a rounding problem. It is two different weeks.
One market wrap had one barrel exact and the other eight dollars out
And now the part that makes the 24 September piece look less like pedantry. A widely read Friday market wrap gives West Texas at 92.41 dollars, down 2.20, down 2.33 percent. Every one of those three figures is exactly right — it matches the settlement to the cent and it matches the change to the cent. The same paragraph says Brent “traded below 98 dollars per barrel.”
Brent settled at 104.32. Its intraday low that session, on a separate reader, was 104.40. So the figure is not merely wrong, it is more than six dollars below the lowest price the contract traded all day and more than eight below where it settled. One publisher, one paragraph, two barrels: one correct to the cent and one outside the day’s range entirely.
We are naming the shape rather than scoring a point, because the shape is the useful part. The error is not random noise in a number — it is what happens when a writer holds “oil” as one idea and reaches for whichever figure is nearest. A third publisher had Brent at 106.03 intraday late Friday morning and a fourth headlined that Middle East risk was keeping Brent above 100. Read three and the band on Brent’s Friday is eight dollars wide. Read the two that give settlements and they agree to the cent, and Monday’s open reconciles with both of them exactly. Which is the practical lesson: prefer a source that publishes a settlement over a source that publishes an adjective.
What the yen actually has under it, and it is not a round number
The finance minister, Satsuki Katayama, said on Friday that she would not hesitate to take bold action on the yen. That was her second such warning, and it came alongside her disclosure that the US president had raised yen weakness with Prime Minister Sanae Takaichi in New York, and alongside a statement that she would continue coordinating with the US Treasury Secretary.
The figure worth having in your head is the one this desk has spent six articles declaring unreachable at the ministry’s own site: Japan bought a record 15.4 trillion yen, about 97.4 billion dollars, through 26 August, in what one wire describes as the first US-Japan coordinated intervention since 1998, when the currency went through 160. We now have a second reader for that figure, with a dollar equivalent and a stated cutoff, and we are marking the item as second-sourced rather than closed, because we still have not read it at the ministry.
Which brings the week’s best scheduled event forward. At 10:00 UTC on Wednesday the Ministry of Finance publishes its intervention data for 27 August to 28 September. That window begins the day after the record figure’s cutoff and it contains the 18 September session in which Japanese authorities are reported to have checked rates with overseas dealers. The single most load-bearing unverified claim in this desk’s yen coverage gets a primary-source answer on Wednesday morning. Put it in the calendar above the payrolls.
Note also that spot is not sitting on the level everyone quotes. Dollar-yen is 260 pips below 160.00, 66 pips below the 158.05 at which the rate check is reported to have happened, and 19 pips below a 200-period moving average one publisher puts at 157.59 — which is not the 200-day average this desk has had at 158.47 and 158.43 on two readers. There are at least three moving averages in circulation for this pair and they are 88 pips apart. If a level matters to your system, name its period.
In forty minutes, the minutes of the meeting the dissenter won
At 23:50 UTC tonight — 08:50 JST, roughly forty minutes after this is published — the Bank of Japan releases the minutes of its 30 and 31 July meeting, alongside the August services producer price index at the same minute. This desk has carried a question about that meeting’s vote for sixteen slots, and we settled it at the Bank’s own statement before writing this.
The July decision was taken “by an 8-1 majority vote” to hold the uncollateralized overnight call rate at around 1.0 percent. The dissenter was Takata Hajime, and his recorded proposal was that the Bank “would encourage the uncollateralized overnight call rate to remain at around 1.25 percent.”
One and a quarter percent is the rate the Board adopted on 18 September and which took effect on 24 September. So tonight’s release is the internal record of a meeting at which one member proposed, and was outvoted on, the exact policy the committee implemented seven weeks later. Minutes of a superseded hold are normally a non-event and we would usually tell you to filter the window. Read for the argument Takata lost rather than the decision, this one is worth eight minutes of your morning — not because it will move spot, but because it is the cheapest available read on how fast this committee changes its mind.
One correction to the schedule while we are here: what arrives on 1 October at 08:50 JST is the Summary of Opinions from the 17 and 18 September meeting, not the minutes of it, whatever your calendar says. The two are different documents released on different cadences, and the September minutes will not exist until after the next meeting.
What this does not tell you
The 156.93 low is one publisher’s figure. Two publishers confirm that a 156 handle traded on Friday; only one gives the decimal, and every pip calculation in this article that uses it inherits that.
The two spot readings this morning are three pips apart at the top of their ranges, which is the error bar on the 47-pip recovery figure and worth remembering before you treat 23 percent as precise.
We do not know that the rejection is priced. Monday Asian liquidity is thin, month-end and quarter-end flows begin tomorrow, and a move that looks like a considered repricing at 08:00 JST can look like nothing at all by 09:00 UTC.
On the diplomacy itself we are reporting a disagreement rather than a fact: the same publisher’s two articles have Iran’s foreign minister making the seven-day proposal on Thursday in one and on Friday in the other. We have not resolved which, and we have not established the precise time of Saturday’s rejection beyond that it was made to reporters at the White House.
The causal chain in this article — Hormuz to crude to US long-end yields to the dollar to the yen — is the reading this desk has been working with for three weeks. It is not measured. Friday is consistent with it. Friday is also consistent with the yen having rallied on verbal intervention while crude fell for its own reasons, and that is precisely the ambiguity the first section refuses to resolve.
None of this is investment advice or a directional view.
Related
- FX events calendar — this week in UTC: BOJ July minutes 27 September 23:50 · RBA decision 29 September 04:30 and Bullock 05:30 · Ministry of Finance intervention data 30 September 10:00 · US PCE 30 September 12:30 · Tankan 30 September 23:50 · US payrolls 2 October 12:30.
- Signals — how we treat thin-liquidity Tokyo sessions and weekend gaps.
- Expert advisor presets — correlated-exposure and news-window settings for the yen crosses.
