MORNING BID EUROPE-Yen's to-do list gets harder from here

Japan and the US conducted a rare coordinated yen-buying intervention, with the US pledging to purchase $5-10 billion worth of yen to stabilise the currency.

A look at the day ahead in European and global markets from Ankur ​Banerjee Aided by the U.S., Tokyo's coordinated effort to ​pull the Japanese yen away from 40-year ‌lows ​was probably what was needed to turn the tide for the frail yen, but will require monetary policy follow-through to make the move stick.

Japan and the United ‌States conducted coordinated yen-buying intervention, Japan's finance ministry said on Monday, confirming a rare bilateral action, the first such move since 2011, and warned they will not hesitate to take further action. A Reuters photograph on Friday highlighted the joint effort being undertaken ‌as U.S. Treasury Secretary Scott Bessent exposed a "to-do" list during a cabinet meeting indicating he was contemplating U.S. purchases ‌of $5 billion to $10 billion worth of Japanese yen.

Taken over Bessent's shoulder during an on-the-record portion of the meeting, the Camp David notepad bears the underscored words "To Do" followed by "Buy Japanese Yen (JPY) $5-10 bil." The to-do list for Japan though is likely to be much longer. The oil-importing country will ⁠be hoping ​that a deal to end ⁠the war in the Middle East could be on the cards after U.S. President Donald Trump's statement that talks with Iran will take place ⁠later in the day.

Oil prices slid following Trump's comments but Asian stocks remained under pressure as investors remained sceptical of a deal ​being struck. Analysts also point out that Japan's monetary policy remains the crucial part of the broad picture as ⁠interest rate differentials need to narrow for the yen to strengthen.

That has put pressure on the Bank of Japan to hike and hike soon. ⁠The ​two-year JGB yield, which is most sensitive to near-term monetary policy moves, briefly hit 1.545%, the highest since 1995, as markets priced in the chance of an early rate hike. For now, the yen remains on the charge as ⁠it suddenly spiked in early Asian hours in what analysts suggested could be another bout of intervention. That left the ⁠currency at 156.54 per U.S. ⁠dollar, well away from the 1986 lows of 163.99 it hit in July.

Key developments that could influence markets on Monday: Economy events: Germany retail sales for June and July ‌PMI data for France, ‌Germany, UK and the euro zone (By Ankur Banerjee in ​Singapore; Editing by Jacqueline Wong)