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Dollar drops from an eight-week high against yen


The dollar added to 159.94 earlier in the session, the highest since April 29, when the yen hit a 34-year low of 160.245

The U.S. dollar slid from an eight-week high against the yen on Monday, with traders back on alert for government intervention to support the Japanese currency after it reached just short of 160, a level that earlier triggered action from the Ministry of Finance to prop it up.

The dollar advanced to 159.94 earlier in the session, the highest since April 29, when the yen hit a 34-year low of 160.245. That led Japanese authorities to spend around 9.8 trillion yen to support the currency.

It briefly slid in European trading to 158.75 per dollar, and was 0.1% weaker at 159.65. The dollar dropped after seven consecutive days of gains.

The Japanese track record indicates that they do not target a specific level, according to Marc Chandler, chief market strategist, at Bannockburn Forex in New York.

So why is the market testing the BOJ again? One of the reasons is that there has been a camp that’s very sceptical about the merits of intervention when interest rates are so wide, he added.

U.S. 10-year yields were last at 4.251%, while 10-year Japanese government bonds yields were at 0.99%.

Earlier, Japan’s top currency diplomat Masato Kanda said authorities will take appropriate steps if there is excessive foreign exchange movement, and that the addition of Japan to the U.S. Treasury’s monitoring list would not restrict their actions.

The yen has come under fresh pressure after the Bank of Japan’s decision this month to postpone lowering bond-buying stimulus until its July meeting. It has been 1.4% lower against the dollar so far in June, and around 12% weaker this year.

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