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Yen holds gains after Japan and US coordinated intervention
The yen was last down 0.4% at 157.79 per dollar, after rallying as much as 5% over three sessions on signals to deter yen shorts and rare US Treasury yen buying.
The yen slipped on Tuesday but retained most of its recent gains following a rare coordinated intervention by Japan and the United States, which aimed to affect market positioning. The Japanese currency had surged as much as 5% over the prior three trading sessions before easing, and it was last down 0.38% at 157.79 per dollar. Japan had confirmed the coordinated yen-buying intervention on Friday after the U.S. joined the move, a development that helped push the yen to a three-month high of 155.20 in the previous session. The yen remains well above its 40-year low of 163.99 reached in July, according to Reuters. Axel Merk, chief investment officer at Merk Investments, said the key impact of intervention may be signalling rather than a lasting medium-term effect, arguing it was designed to discourage traders from shorting the yen. TS Lombard analysts led by Daniel Von Ahlen also warned that yen short positioning remains elevated and could be particularly risky if authorities intervene again. Reuters reported that two market sources said the U.S. Treasury bought yen for euros last week instead of selling dollars, an unusual step analysts viewed as likely intended to strengthen the yen while avoiding an interpretation that Washington wants a weaker dollar. BNP Paribas analysts said the broader outlook for the yen had not changed, and while risk-reward for long USDJPY may be less attractive than before, they still expected the pair to end the year higher than current levels.