Signs of intervention in yen could undermine dolla

Aihucha reported on September 11 that any signs of intervention by the Japanese authorities may cool the dollar's gains, as the trend of the yen now becomes more important to the continued strength of the dollar. One indicator shows that the 30-day correlation between the U.S. Dollar Index and USD/JPY has recently jumped to 0.60 from less than 0.4 at the end of August, indicating that a weaker yen is becoming increasingly important as a driver of dollar gains. However, the trajectory of the Fed's actions is undoubtedly still a key factor, and the current correlation between the U.S. dollar index and the two-year U.S. Treasury yield is still around 0.6. As of last Friday, the U.S. dollar index had risen for eight consecutive weeks, its longest streak since 2005. But the dollar got off to a rocky start to the week following hawkish comments from Bank of Japan Governor Kazuo Ueda over the weekend.