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12/07/24
154
JPY Higher Amid Intervention Speculation
On Thursday, the Japanese yen firmed sharply and the USDJPY pair dropped to a one-month low amid speculation over the government potentially intervening in currency markets.
The yen’s strength also came as lower-than-expected consumer price index data hit the U.S. dollar and increased expectations for an interest rate cut by the Fed in September.
In early Friday trade, the USD/JPY pair settled at about 159, after on Thursday falling more than 2%. Earlier this week the pair traded near 38-year highs at about 162 yen.
Traders had expected USD/JPY to hit 162 as a line in the sand for government intervention.
The sharp drop led to some speculation of Japanese government intervention in currency markets. Masato Kanda, Japan’s top foreign exchange diplomat who had spearheaded earlier intervention in the yen, offered little clues on whether the government had acted this time.
Local media reported that the Bank of Japan had performed a rate check for the yen versus the euro – a move that may have led to some currency market intervention.
Over the past month, the yen had weakened significantly as a series of weak Japanese economic readings increased bets that the BOJ would have little space to tighten policy further this year.
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