The yen hovered near 160 per US dollar on Tuesday as analysts said the impact of recent US-Japan currency intervention was fading, while the Australian dollar held near an eight-week high after the Reserve Bank of Australia kept its cash rate at 4.35% but left the door open to another increase.
The yen was last at 159.20 per dollar after falling 0.9% on Monday, having moved further away from last week’s three-month high of 155.20 following Japan’s rare intervention with the US at the end of July. The currency has since surrendered nearly half of its intervention-led gains.
Kieran Williams, head of Asia FX at Intouch Capital Markets, said the move in dollar-yen after the intervention was not a surprise, noting “this is what happens when intervention is not backed by a change in the (interest rate) differential.”
He said a fresh intervention could be triggered by a retest of the yen’s weakness without a US data or policy driver, while the 100-day moving average at 160.01 would be the first test of the intervention’s staying power ahead of US inflation data on Wednesday.
Meanwhile, the Australian dollar was steady at US$0.7054 after the RBA held rates as expected. The central bank has raised rates by 75 basis points since February to contain inflation.
Bank of America Japan FX and rates research head Shusuke Yamada said coordinated intervention could lead to faster Bank of Japan rate hikes and revised his year-end yen forecast to 149 from 152.
The US dollar was broadly steady as oil prices remained near one-week highs amid fading hopes of a US-Iran deal.
Reuters
