Yen Under Pressure as Dollar Eyes Weekly Gain Amid Market Intervention Concerns

The Japanese yen remained under pressure near a 10-month low on Friday, prompting traders to watch for potential intervention from Tokyo. Japanese officials, including Finance Minister Satsuki Katayama, hinted that action could be taken to curb excessive currency volatility, briefly pushing the yen higher in early Asian trading. The dollar, meanwhile, continued its upward trajectory, poised for its strongest weekly gain in over a month.

The yen traded at 157.41 per dollar, recovering slightly from Thursday’s 10-month trough of 157.90, though it was still set for a weekly loss of 1.8%. Investors have been increasingly concerned about Japan’s fiscal outlook, fueled by Prime Minister Sanae Takaichi’s ambitious spending policies. This week, Takaichi’s cabinet approved a 21.3 trillion yen ($135.4 billion) stimulus package, marking her first major economic initiative.

Vishnu Varathan, head of macro research for Asia ex-Japan at Mizuho, described the situation as “mounting intervention risks,” noting that any government action is likely to be opportunistic and short-lived. Tokyo last intervened in July 2024, spending 5.53 trillion yen ($37 billion) to prevent the yen from sinking to historic lows. The euro and sterling were also affected, with the yen trading near record lows against the euro at 181.56 and hovering near a 16-month high against the pound at 205.94.

Across the Atlantic, the U.S. dollar’s strength was supported by investors’ expectations that the Federal Reserve would likely refrain from cutting interest rates in December. A delayed September U.S. nonfarm payroll report showed mixed signals: employment growth accelerated, but the jobless rate rose to 4.4%, its highest level in four years. This data underlined the uncertainty surrounding the Fed’s next move, keeping the dollar index near a 5-1/2-month peak at 100.13.

Elsewhere, the Australian and New Zealand dollars saw minor gains, while cryptocurrencies struggled. Bitcoin slid to a seven-month low of $85,387.82, and ether fell to $2,777.39, reflecting broader market caution. With currency markets watching Tokyo closely for any signs of intervention and global investors navigating U.S. rate expectations, the coming days are shaping up to be a pivotal period for forex and global finance.

source: cnbc