Yen holds on ‌to intervention-driven gains

The yen held on ‌to most of its intervention-driven gains on Tuesday, after last week’s action by Tokyo to shore up the currency kept speculators wary of rebuilding bearish positions.

The yen softened slightly in early Asia trade and was down 0.1% ‌at 157.35 per dollar, having touched a three-month high of 155.20 in the previous session, though it remained well above its 40-year low. The currency had soared 5% over the last three trading sessions, with Japan confirming coordinated yen-buying intervention on Friday.

I expect concerns about ‌the possibility of further intervention by Japanese and U.S. authorities to constrain downside pressure on the yen in the near term, said Tomo Kinoshita, global market strategist ‌for Japan at Invesco. I believe that the yen is likely to appreciate against the U.S. dollar towards the end of this year. PM Takaichi’s stimulus policy agenda has contributed to weakness in the yen but the market seems to have already priced in major elements of Takaichi’s policy.

Against the euro, the yen held near a more than eight-month top and last stood at 181.19, ⁠while sterling bought 211.60 yen. Monday’s sudden surge in the ⁠yen stirred speculation that Japanese authorities had intervened again, though officials offered no confirmation.

Analysts at Citi said trading volumes in dollar/yen hit roughly $27 billion in the early morning window on Monday, compared with the ⁠recent averages of $1.9 billion.

The dollar, meanwhile, was nursing losses, having slipped in the wake of the yen-buying intervention and on the back of falling oil prices. U.S. president said on Monday that talks with Iran were under way, but Iran denied that any negotiations were being held or planned.

Against the U.S. currency, the euro was little changed at $1.1511, having hit a 1-1/2-month high of $1.1559 ⁠in the previous session, while sterling slid 0.06% to $1.3427. The dollar index bounced from a 1-1/2-month low to 99.98.