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Yen cowers near 150 as intervention chatter runs rife
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A worker holds samples of new Japanese yen banknotes in Tokyo on Nov. 21, 2022 at a factory of the National Printing Bureau at a media event about the new notes scheduled to be introduced in 2024. (Reuters/Kim Kyung-Hoon)
T
he yen sat on the stronger side of 150 per dollar on Wednesday, after an unexpected surge in the previous session stoked speculation that Japanese authorities could have intervened to support the currency.
The Japanese currency was last marginally lower at 149.12 per dollar in early Asia trade, after having jumped nearly 2 percent at one point on Tuesday to a high of 147.30 – a move that came after the yen tumbled to 150.165 per dollar, its weakest since October 2022.
"Them stepping in here would be perfectly consistent with recent warnings from top officials and past behaviour," said James Malcolm, head of FX strategy at UBS.
"Authorities may be unable turn the trend in FX markets immediately. Yet entering the market in size provides a strong signal and helps buy time for other things to fall into place that in the fullness of time then contribute to position unwinds."
Japanese authorities last year intervened to prop up the yen for the first time since 1998.
Other currencies similarly fell against the yen in the previous session, with the euro losing more than 1.5 percent to a low of 154.39 yen. It recovered some of those losses and last bought 156.05 yen.
Japan's top currency diplomat Masato Kanda said on Wednesday he would not comment on whether Tokyo intervened in the exchange-rate market overnight, though said that "we have only taken steps that have the understanding of US authorities".
US Treasury Secretary Janet Yellen said last month whether Washington would show understanding over another yen-buying intervention by Japan "depends on the details" of the situation.
DOLLAR POWER
In the broader currency market, the dollar charged higher on the back of upbeat data on Tuesday showing US job openings unexpectedly increased in August amid a surge in demand for workers in the professional and business services sector.
That sent the greenback to a near 11-month high of 107.34 against a basket of currencies, with the dollar index last at 107.07.
Sterling edged 0.03 percent lower to $1.20745, languishing near the previous session's close to seven-month low of $1.20535.
The euro similarly bottomed at $1.0448 on Tuesday, its lowest since December, and was last at $1.0469.
"Markets have been rattled by yet another positive US data surprise vindicating the [Federal Reserve's] mantra of higher for longer," said Rodrigo Catril, senior FX strategist at National Australia Bank.
"The jump in job openings suggests the US labor market is easing less rapidly than implied by recent data releases [...] That said, not all details in the report pointed to a strong labor market."
Atlanta Fed President Raphael Bostic said on Tuesday the steady rise in long-term US Treasury bond yields hasn't yet shown signs of slowing the economy more than would be expected in a typical Fed tightening cycle. Meanwhile, Cleveland Fed President Loretta Mester said she is open to raising interest rates again.
The Australian dollar was last 0.11 percent higher at $0.63085, having slid nearly 1 percent on Tuesday after the country's central bank held interest rates steady for a fourth month and showed no urgency to hike again.
The New Zealand dollar gained 0.07 percent to $0.5912, with an interest rate decision from the Reserve Bank of New Zealand due later on Wednesday, though expectations are for the central bank to also keep rates on hold.
