The yen traded at 159.1 per dollar on Tuesday, edging back toward the 160-per-dollar level that has repeatedly drawn Japanese authorities into the market this year. Speculators cut bearish yen bets by the most in over twelve years, even as Tokyo's finance minister signaled readiness to intervene again.
The yen stood at 159.1 per dollar on Tuesday, still within reach of the 160-per-dollar threshold. According to Crypto Briefing, that level has functioned as something of a red line for Japanese authorities. The currency had weakened 0.9% on Monday, moving further from last week's three-month high of 155.20 struck after the rare US-Japan yen-buying intervention at the end of July.
That intervention followed a 40-year low of 163.99 per dollar. The yen has since given back nearly half of those gains, and traders are anticipating that authorities will re-enter the market.
Speculators slash bearish yen bets
Positioning data shows the shift taking hold. Speculators cut bearish yen positions by the largest amount in more than 12 years. The net short yen position fell by $8.865 billion to $3.604 billion in the week ending August 4. Still, analysts expect speculators to rebuild short positions, though faster monetary tightening in Japan remains a potential risk.
Japan's intervention bill tops $100 billion
Japan has already spent over $100 billion defending its currency this year, according to Crypto Briefing. The pressure on Tokyo has been building for months, as the interest rate gap between the US and Japan has pushed yield-seeking capital toward dollar assets while the Bank of Japan has moved cautiously. By that outlet's account, the yen touched 163.73 per dollar on July 28, a nearly 40-year trough. Japan and the United States then carried out their first coordinated yen-buying intervention since 1998.
That move pushed the yen back to the 155-157 range, its firmest levels in three months. Earlier unilateral interventions this year, totaling 11.7 trillion yen, had provided only fleeting relief. Japan has also spent up to $36.58 billion in a single intervention round. Japanese Finance Minister Satsuki Katayama has signaled readiness to act again if conditions warrant it.
Australian dollar holds near multi-week high
Elsewhere in the region, the Reserve Bank of Australia held its cash rate at 4.35%, meeting expectations, while warning it may need to raise rates again. The Australian dollar held steady at $0.7054, near its strongest level since mid-June.
Sources: Forex News, Crypto Briefing
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