Frail yen grazes 150 again as anxiety mounts over Middle East
By Vidya Ranganathan
SINGAPORE (Reuters) -Japan's yen took the spotlight in Asia on Monday, weakening to the 150-per-dollar level, but just briefly, as investors betting on a further rise in dollar yields lost out to those expecting Japanese authorities will intervene in markets.
The risk of Israel's war on the Islamist group Hamas becoming a wider regional conflict kept markets on edge, as Israeli air strikes battered Gaza early on Monday, and the United States dispatched more military assets to the region.
U.S. Treasuries were subdued as investors hunkered down for a European Central Bank meeting and U.S. GDP data later in the week.
Ten-year yields were around 4.97%, having briefly popped above 5% last week after Federal Reserve Chair Jerome Powell said the U.S. economy's strength and tight labor markets might warrant tighter financial conditions.
The dollar index added 0.02% to 106.19, with the euro down 0.07% at $1.0586.
The Japanese yen last traded at 149.83 per dollar, after briefly easing early on Monday to 150.14, a level last seen on Oct.3 when traders had suspected the Bank of Japan intervened to nudge it to the stronger side of 150.
Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo, said it seems like a set of investors were betting the Bank of Japan will defend the 150 level, even as others saw rising U.S. yields as a reason to keep pushing the dollar up.
«Potentially there are two camps out fighting around 150, so that's why dollar-yen doesn't move from here,» Yamamoto said.
While there was some speculation the BOJ might once again tweak its yield-curve policy band at a scheduled policy review next week, the BOJ had also shown it will not let domestic yields rise sharply, he said.
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