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Yen firms as intervention speculation grows after BOJ holds rates
The dollar finished mixed on Friday, while three Fed dissenters reiterated support for a 25 basis point hike at this week’s FOMC meeting.
The U.S. dollar ended Friday with mixed performance, but the yen remained the dominant focus after speculation intensified that Japanese authorities were preparing to support the currency. Forexlive reported that news coverage of official rate checks and growing expectations for intervention helped drive the yen higher for a second straight day.
Further reports said banks had been instructed to stand ready to exchange yen for euros, reinforcing the view that policymakers are uncomfortable with recent yen weakness. Trading activity, according to Forexlive, centered more on Japan-specific developments than broad U.S. dollar flows, with other major currencies moving in relatively narrow ranges.
In Japan, the Bank of Japan left its policy rate unchanged at 1.00%, as expected, though board member Takata dissented in favor of a 25 basis point increase. Traders instead weighed the BOJ’s modestly more optimistic economic outlook, continuing inflation risks, and the possibility of additional action if downward pressure on the yen returns.
Forexlive also noted that the three Fed dissenters on Friday delivered consistent arguments for a 25 basis point rate hike at the upcoming FOMC meeting. Neel Kashkari, Beth Hammack, and Lorie Logan each said inflation is still too high and not on a credible path back to the Fed’s 2% target without further tightening, emphasizing risks including entrenched inflation and a labor market that remains resilient.