Sliding yen stokes intervention threat; dollar reigns
yen approached the closely watched 150 per dollar level on Monday and kept traders on intervention watch after the Bank of Japan and Governor Kazuo Ueda quashed hopes of any imminent move away from its stark ultra-loose monetary policy.
In the broader currency market, the dollar was on the front foot, extending its gains from last week after a still-hawkish Federal Reserve surprised markets by signalling U.S. rates would need to stay higher for longer than initially expected.
The yen fell to a more than 10-month low of 148.49 per dollar and remained within striking distance of 150, a level which some market watchers saw as a line in the sand that would spur forex intervention from Japanese authorities similar to that of last year's.
The Japanese currency had fallen more than 0.5% on Friday after the BOJ maintained ultra-low interest rates and stuck to its dovish stance, while Governor Ueda similarly stressed the need to spend more time assessing data before raising interest rates.
«I don't think the level matters that much and will be the trigger (for intervention).
I think the pace of change matters more… But I do think the risk of an FX intervention is higher now given all the warnings from Japanese officials,» said Carol Kong, a currency strategist at Commonwealth Bank of Australia.
«Also, there is a higher chance of a coordinated intervention just because U.S. Treasury Secretary (Janet) Yellen made some remarks the other day and she basically gave the green light to a BOJ intervention.»
Yellen said last week whether Washington would show understanding over another yen-buying intervention by Japan «depends on the details» of the situation.
Elsewhere, the euro gained 0.04% to $1.0649, after having fallen to a six-month
