The yen is headed for its biggest weekly loss in three months, as the impact of U.S. and Japanese intervention fades. The currency has fallen about 1% this week to 159.43 per dollar, surrendering roughly half the gains sparked by intervention in late July and early August. It was trading near 164 per dollar before July’s intervention, and traders see the 160 level as a potential trigger for fresh official action.
Currency Market Trends
The broader currency market has been fairly steady this week, with support for the dollar from higher oil prices and Middle East tension offset by benign U.S. jobs and inflation reports. Overnight figures showing unchanged U.S. producer prices in July further supported dialling back bets on a September hike, now seen as a roughly 35% chance.
Intervention Prospects
Japan may conduct more joint yen intervention 'at any time' and signal the chance of faster-than-expected interest rate hikes to stem further falls, according to Tokyo’s former top currency diplomat Mitsuhiro Furusawa. Markets have already bet on the Bank of Japan raising rates further and sooner than previously expected, with a 76% chance of a BOJ hike in September, according to Tokyo Tanshi data.
