The dramatic move begins what could be a busy week for currency traders with a Fed meeting concluding on Wednesday, U.S. payrolls data on Friday, and European inflation data throughout the week beginning with German and Spain on Monday
Japan’s currency soared as much as 5 yen against the dollar on Monday, with traders citing heavy dollar-selling intervention by Japanese banks for the first time in 18 months after the yen reached new 34-year lows earlier in the day.
The dramatic move begins what could be a busy week for currency traders with a Fed meeting concluding on Wednesday, U.S. payrolls data on Friday, and European inflation data throughout the week beginning with German and Spain on Monday.
The dollar dropped as far as 154.4 yen in several sudden moves in Asia trade and again in the European morning that took it from an intraday high of 160.245, its highest since 1990.
Japan’s top currency diplomat Masato Kanda refused to comment when asked if authorities had intervened, though traders said they had.
The dollar was at 155.55 by 0755 GMT, down 1.7%. Trading in Asia was thinner than normal because of Japan’s Golden Week holiday.
The sudden, sharp decline in dollar-yen passes the duck test. If it looks like a duck, swims like a duck, then it probably is a duck. Looks and smells like intervention, said Sim Moh Siong, currency strategist at Bank of Singapore.
Markets had been wary that Japanese authorities might intervene to support the yen after the currency dropped more than 10% against the dollar this year.
The yen had moved around 3.5 yen between 158.445 and 154.97 on Friday as traders vented their disappointment after the BOJ kept policy settings unchanged and offered few clues on lowering its JGB purchases – a move that might have put a floor under the currency.
