The yen threatened to snap a three-day losing streak after senior Japanese officials agreed to meet for the first time since June to discuss markets.
(Bloomberg) — The yen threatened to snap a three-day losing streak after senior Japanese officials agreed to meet for the first time since June to discuss markets.
The currency edged 0.1% higher to 143.60 per dollar in Tokyo having been modestly lower for much of the day. It had touched 144.99 Wednesday. Traders were watching for a break of 145 and were keeping an eye on 146.78, the level reached before joint Japan-US intervention to support the yen back in 1998.
Officials from the Ministry of Finance, the Bank of Japan and Financial Services Agency will hold a 3-way meeting from 4:45 p.m. local time, to discuss international financial markets, according to a joint statement. It will be the first such meeting in three months.
The US Treasury Department on Wednesday stuck by its reluctance to support any potential intervention in currency markets, after Japanese Finance Minister Shunichi Suzuki said he was concerned about very sudden and one-sided moves.
“So far the Japanese officials have been reluctant to act unilaterally and instead preferred to talk up the currency,” said Valentin Marinov, head of G-10 currency research at Credit Agricole in London. “Given that the US has so far refused to even discuss the possibility to intervene to cheapen the dollar, I think that a concerted intervention is still some ways off.”
With the dollar gaining not just against the yen but also a broad swathe of currencies worldwide, traders say it’s difficult to see where its decline halts. The pair has closely tracked moves in Treasury yields which retreated Thursday.
“Given that the BOJ remains resolutely dovish, many clients think that an FX intervention would do little to lastingly change the downward trajectory of the yen for now,” added Marinov.
Cornered FX Traders Brace for Dollar to Smash More Asia Records
The yen has slumped to levels that leave it on track for its worst year on record as the divergence between US and Japanese monetary policy widens. The BOJ is resolutely keeping policy loose to bolster the economy, while the Federal Reserve has been aggressively hiking rates to beat back surging inflation.
“From here, yen weakness seems likely to persist as long as US bond yields are rising and equity markets aren’t rolling over too violently,” said Kit Juckes, chief foreign-exchange strategist at Societe Generale SA. “But the cheaper the yen gets, the greater the danger that when the yield cycle does turn around, the yen will rally very sharply.”
(Adds comments from Credit Agricole.)
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