The U.S. currency fell sharply against the yen on Tuesday after briefly rising above the psychological 150-per-dollar level for first time since October 2022, leading some to see signs of intervention.
The sharp move lower suggested the Bank of Japan had intervened in the market to keep the yen from falling further.
Japan’s finance ministry did not respond to requests for comment and nor did the New York Federal Reserve.
“It has all the hallmarks of intervention in all honesty,” said Michael Brown, market analyst at Trader X in London.
Others in the market thought otherwise.
“The dollar did get above 150 on the announcement on the JOLTS report,” said Marc Chandler, chief market strategist at Bannockburn Global Forex in New York, referring to data showing U.S. job openings jumped in August.
“The dollar-yen came off a lot; people think it’s intervention. I don’t think so,” he said. “Japan intervened three times last year, and none of it was during the U.S. time zone.”
Jeremy Stretch, head of G10 FX strategy at CIBC Capital Markets in London, said higher yields on both U.S. Treasuries and Japanese government bonds led to the breakthrough of the 150 threshold.
“The continued uptrend in UST-JGB encouraged the 150 to be breach in the wake of the better-than-expected JOLTS data. One of our traders suggested that authorities may have checked prices which encouraged stops to be triggered.”
The dollar slipped 0.51% against the yen to 149.08 after hitting 150.165 on the JOLTS report.
“People who had bought USD versus the JPY had levels at this which they would sell out/unwind there positions,” Stretch said. “The recent violent price encouraged those sell orders to be triggered amplifying the immediate correction.”
Japanese Finance Minister Shunichi Suzuki said on Tuesday authorities were watching the currency market closely and stood ready to respond, but also said any decision on currency market intervention would be based on volatility, not specific yen levels.
Although Japanese officials have stated “that the government is not watching any particular level … interventions had previously occurred around 150, signifying official discomfort when the (yen) weakens beyond this point”, said Wei Liang Chang, foreign exchange and credit strategist at DBS.
Strong U.S. manufacturing data on Monday and Federal Reserve officials saying once again that monetary policy would need to stay restrictive for “some time” strengthened the dollar.
In addition, an agreement over the weekend to avert a partial U.S. government shutdown sent benchmark Treasury yields to as high as 4.706% on Tuesday, a 16-year peak. That earlier drove the dollar higher as real interest rates factor in inflation, which is falling faster in the United States than in Europe.
The pound fell to its lowest since March and was last down 0.1% at 1.2075.
The dollar index, which tracks the unit against six peers, was up 0.13% at 107.16, at its highest since November.
The Australian dollar slipped to an 11-month low of $0.6302, down as much as 0.95%, following the Reserve Bank of Australia’s (RBA) decision to hold rates, while Russia’s rouble weakened past the symbolic threshold of 100 to the dollar before recovering slightly in early trade.
The dollar was up 0.4% against the Swiss franc at 0.9215 at a six-month high after Swiss inflation dipped and came in slightly below expectations.