Yen hits four-week high, intervention questions circulate
The rally in the Japanese currency, which has been languishing at around 38-year lows, began on Thursday just after data showed U.S. consumer prices for June eased, boosting the odds of the Federal Reserve cutting rates as soon as September.
On Friday, the move came after data showed that U.S. producer prices increased moderately in June.
«If they intervened yesterday, it makes it likely that they intervened today. And I think it's good strategy to keep the market off balance,» said Steve Englander, head of global G10 FX research and North American macro strategy at Standard Chartered Bank NY Branch.
Englander added, however, that «it could also be stops», referring to the closure of positions betting against the yen, following losses.
Daily operations data from the BOJ on Friday suggested the central bank had spent between 3.37 trillion and 3.57 trillion yen ($21.18 billion-$22 billion) on buying the yen on Thursday, less than three months after its last foray into the market.
James Malcolm, head of FX strategy at UBS in London, said Friday's move may have been the result of an intervention or of rate checking. The Bank of Japan sometimes calls dealers to ask for rate levels, which can indicate a potential intervention and itself causes market moves.
«They need to change tactics to keep the market on its toes and show they are serious. Looks like yesterday didn't cost them much. So this may ensure we close the week near the lows, which will put further technical pressure on the (dollar-yen) cross,» he said.
