The yen has posted several bearish moves in recent days, hitting a 38-year low of 161.96 per dollar on Thursday and Friday, sharply appreciating sudden rallies that market participants said were signs of currency intervention.
Bank of Japan data released on Tuesday indicated that Tokyo may have spent 2.14 trillion yen ($13.5 billion) to intervene on Friday. Combined with the amount estimated to have been spent on Thursday, Japan is suspected to have bought about 6 trillion yen through intervention last week.
“The fact that the move is bigger than it is elsewhere seems to point to some sort of intervention, but the timing doesn’t really mean anything, it seems to be coming out of the blue as opposed to being triggered by a move in volatility. .or a move in the spot rate,” said Carl Schmotta, chief market strategist at Corp in Toronto.
“Possibly we are in a situation where traders are trigger-happy, given the fact that the Bank of Japan is emerging in the background and is intensifying underlying moves. But as it stands it is difficult to say whether any intervention will actually be necessary.” is going on here; we’re not seeing flow data that suggests it’s an intervention at this point.”
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Republican presidential candidate Donald Trump cited recent dollar strength as a possible reason for the dollar’s weakness in a Bloomberg interview published Tuesday.
Against the Japanese yen, the dollar weakened 1.12% to 156.56 at 156.09, a low not seen since June 12.
Japan’s Finance Ministry did not respond to requests for comment. Masato Kanda, Japan’s top currency diplomat, said speculators would have to respond if they made excessive moves and that there was no limit to how often authorities could intervene, Kyodo News reported.
The dollar index, which measures the greenback against a basket of currencies, was also weaker on the day, falling 0.38% to 103.80 as comments from several Federal Reserve officials indicated the central bank was moving closer to cutting interest rates.
While markets see only a slim chance of a rate cut of at least 25 basis points (bps) at the Fed’s July meeting, they are pricing in a 96.2% chance for September, according to CME.
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The euro rose 0.32% to $1.0932 ahead of the European Central Bank’s (ECB) policy meeting on Thursday, which is widely expected to hold rates steady.
Sterling strengthened 0.39% to $1.3016 and hit a one-year high of $1.3044 against the dollar on data that showed UK inflation rose slightly more than expected, reducing chances of a rate cut from the Bank of England at its next meeting.
Headline inflation was held at 2% against forecasts of 1.9% year-on-year growth in June, while closely watched services inflation came in at 5.7%.
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