U.S. stocks gain at top data-heavy week amid suspected yen intervention

By Stephen Culp

NEW YORK (Reuters) – U.S. stocks followed their European counterparts higher on Monday and the yen surged amid suspected intervention as investors embarked on what promises to be an action-packed week.

All three major U.S. stock indexes were modestly green at the top of a week filled with high profile earnings, crucial economic data and the U.S. Federal Reserve’s monetary policy meeting.

Meanwhile, the yen jumped after touching 34-year low, with traders citing heavy yen-buying intervention by Japanese banks.

“The risk is that you have these asynchronous central bank moves where some are still seeing the shadow inflation on the cave wall and are afraid to start cutting rates, like the Fed,” said Brian Nick, senior investment strategist at Macro Institute in New York. “Then you have central banks that are effectively tightening policy through currency interventions or in the case of Bank of Japan, getting rid of some of their yield curve control.”

“That makes for a more volatile world versus the one where everybody is in sync and we know where we are in the cycle,” Nick said.

This week’s data releases include European inflation and U.S. labor market indicators, while the Fed is due to convene on Tuesday for its two-day meeting at which it is expected to keep its key interest rate unchanged, but strike a hawkish tone.

Nick said enough data was coming this week to allow to determine whether the economy was still running too hot because of the labor market. “We’ll have a much better picture of whether conversations about Fed rate hikes will creep back into the dialogue or whether everybody’s going to be able to calm down.”

Earnings season shifts into overdrive this week with high profile results expected from Amazon.com (NASDAQ:), Apple Inc (NASDAQ:) and others.

The rose 79.57 points, or 0.21%, to 38,319.23, the gained 12.55 points, or 0.25%, to 5,112.51 and the added 38.75 points, or 0.24%, to 15,966.65.

European shares touched a two-week high, building on the previous week’s gains with economic data and the Fed’s rate decision in focus.

The pan-European index rose 0.14% and MSCI’s gauge of stocks across the globe gained 0.39%.

Emerging market stocks rose 0.92%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.89% higher, while rose 0.81%.

Japan’s yen jumped as much as 5 yen against the dollar, sparking suspicions that Tokyo intervened in the currency market for the first time in 18 months.

Japan’s top currency diplomat Masato Kanda declined to comment when asked if authorities had intervened, though traders said they had.

The dollar was last slightly lower against a basket of world currencies.

The fell 0.17%, with the euro up 0.25% to $1.0719.

The Japanese yen strengthened 1.09% against the U.S. currency to 156.65 per dollar, while sterling was last trading at $1.2547, up 0.46% on the day.

U.S. Treasury yields pulled back from last week’s highs ahead of a Fed meeting.

Benchmark 10-year notes last rose 13/32 in price to yield 4.6156%, from 4.669% late on Friday.

The 30-year bond last rose 21/32 in price to yield 4.7388%, from 4.782% late on Friday.

Crude prices dipped as Israel-Hamas peace talks lowered the geopolitical temperature and tempered fears of a widening regional conflict.

fell 1.43% to $82.65 per barrel and was last at $87.18, down 1.17% on the day.

Gold prices eased on increased prospects for higher-for-longer policy rates as investors looked to Friday’s employment report.

was last little changed at $2,337.27 an ounce.