The yen eased Tuesday but held on to most of the gains from last week's rare coordinated intervention by Tokyo and Washington, keeping the currency well above its 40-year low. Analysts at BNP Paribas said the intervention has not changed the yen's underlying trend, while the dollar slipped broadly against the euro, sterling and the Swiss franc.
The yen eased on Tuesday but held on to most of its gains from last week's rare coordinated intervention by Tokyo and Washington. The currency was last down 0.25% at 157.56 per dollar, pulling back from a three-month high of 155.20 in the previous session but still well above its 40-year low of 163.99 touched in July.
A rare, coordinated rally
The Japanese currency had rallied as much as 5% over the last three trading sessions, after Japan confirmed coordinated yen-buying intervention with the U.S. on Friday in a rare move. Two market sources told Reuters that the U.S. Treasury bought yen for euros last week instead of selling dollars, a highly unusual move likely aimed at helping Japan strengthen the yen without encouraging a view that Washington wants a softer dollar.
Against the euro, the yen slipped 0.33% to 181.36, down from Monday's almost nine-month high of 179.435. Monday's surge in the yen stirred speculation that Japanese authorities had intervened again, though officials offered no confirmation.
Analysts remain unconvinced
Axel Merk, chief investment officer at Merk Investments, said the joint action by Japan and the U.S. appears to be signalling to the market not to short the yen. BNP Paribas analysts led by Ishan Gurnani said in an investor note that the yen's underlying outlook has not changed, even though multilateral currency interventions such as this one tend to occur during periods of heightened market volatility. According to BNP Paribas: "we still believe that the pair will end the year higher than current levels".
Dollar broadly softer
The dollar edged lower against major currencies after recent losses triggered by the yen-buying intervention and a decline in oil prices. The euro was up 0.15% against the greenback at $1.1524. Sterling strengthened 0.17% to $1.3452. Against the Swiss franc, the dollar weakened 0.1% to 0.809.
Pressure on the dollar built after the Federal Reserve held interest rates steady last week, with losses accelerating after the yen intervention. The dollar index eased 0.1% to 99.89.
Source: Reuters
Trading involves risk.
Risk Disclaimer
