The latest decline in the yen has come on the back of the BOJ June policy meeting, where policymakers disappointed investors who were betting on an immediate reduction of the Bank of Japan’s massive bond purchases
The dollar attempted to break above the key 160 yen level on Tuesday but with little success as concerns of currency intervention from Japanese officials kept the yen marginally supported against its rivals.
The dollar was down 0.08% to 159.42 yen, having traded in a tight range throughout the Asian session as traders were wary of testing the key resistance level that had prompted a 9.79 trillion yen ($61.33 billion) currency intervention from Tokyo in late April and early May.
That prevented the yen from hitting fresh lows against other currencies, with sterling staying just below a 16-year high at 202.38 yen.
The Aussie pulled back from a 17-year high against the yen and stayed at 106.21.
The market is showing that they are nervous, and they are very much on edge about this situation, according to Chris Weston, head of research at Pepperstone.
There are inherent risks to being short the Japanese yen now as a carry trade, which is of course what authorities want to see, he said.
The first port of call is to tell currency speculators and people holding for carry that you are on notice, if you hold those positions now, you run the risk of a 400-, 500-pip drop in dollar/yen, he added.
The latest decline in the yen has come on the back of the BOJ June policy meeting, where policymakers disappointed investors who were betting on an immediate reduction of the Bank of Japan’s massive bond purchases.
Minutes of the meeting out on Monday showed the central bank debated the possibility of a near-term interest rate hike with one policymaker calling for a hike “without too much delay”.
Sterling rose 0.09% to $1.2696, while the Australian dollar added 0.1% to $0.6663.
The New Zealand dollar was little changed at $0.6124.
The euro added 0.06% to $1.0741.
Still, the euro was headed for a monthly loss of nearly 1%, owing to the political turmoil in France.
