Yen Jumps 0.75% as Traders Bet on More Intervention
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- Japanese yen climbed as much as 0.75% to 155.69 per dollar before paring gains, with traders citing the threat of FX intervention by Japanese authorities as the trigger for the move.
- Tokyo's Ministry of Finance may have spent as much as 5.48 trillion yen ($35 billion) buying its own currency last week, according to money market data, in what sources told Reuters was the first yen-buying intervention in two years.
- BBVA G10 FX strategist Roberto Cobo Garcia said intervention should cap dollar-yen below 160 as it did in 2024, noting Japan's ample FX reserves, inflationary pressure from a weak yen, and a U.S. administration "broadly comfortable with such action."
- The dollar index rose 0.2% to 98.404 as investors remained cautious after Iranian state news agency Fars reported two missiles hit a U.S. warship near Jask on the Gulf of Oman — a claim U.S. Central Command denied, saying two destroyers had transited the Strait to break an Iranian blockade.
- The euro fell 0.2% to $1.1694 after German Chancellor Friedrich Merz downplayed a rift with Trump over a planned U.S. troop drawdown from Germany and threatened 25% tariffs on EU autos and trucks.
- Bitcoin crossed $80,000 for the first time since January 31, rising 1.4% to $80,046, as the Reserve Bank of Australia prepares a Tuesday rate decision with most analysts expecting a hike to 4.35%.
Why it matters: Japan has now reportedly intervened for the first time in two years, and BBVA expects authorities to defend the 160 line, meaning dollar-yen is effectively range-bound by policy rather than market forces. The Middle East backdrop — disputed missile strikes, a U.S. naval transit of Hormuz — is keeping the dollar bid and risk appetite suppressed, with any peace deal likely to weaken the greenback fast.
