(Bloomberg) — Japan’s top currency official helped lift the yen a touch on Friday after he warned he was keeping a close eye on market movements following the yen’s slide into the 150 range against the dollar overnight.
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“At the moment we’re seeing slightly one-sided, sudden moves in the currency market,” said Atsushi Mimura, vice finance minister for international affairs. “We’ll keep monitoring the forex market with a high sense of urgency, including any speculative moves.”
The comments followed a slip in the yen to as weak as 150.32 against the dollar overnight as stronger-than-expected US retail sales and labor market data weighed on expectations for the pace of Federal Reserve interest rate cuts.
Mimura’s remarks helped nudge the currency back toward the 150 mark, with the yen briefly hitting 149.88 against the dollar.
While the comments didn’t hint at any action from Japan for now, they help stake out the 150 range as a zone worth close observation.
Japan has already spent more than $100 billion intervening in foreign exchange markets this year to prop up the yen. It’s thought to have last stepped into markets on July 12 when the currency was around 158.76.
The trajectory of the currency will depend on expectations for interest rates in the US and Japan over the coming months. Further signs of the US economy outperforming forecasts will put downward pressure on the yen as it tempers views on the pace of Fed action.
Meanwhile, uncertainties linked to the US and Japan elections will continue to complicate the outlook for market players.
The BOJ helped spark a global market meltdown after its second rate hike this year in July, a factor that will likely feed into cautiousness over its next move. The central bank is widely expected to leave rates unchanged at its October meeting, with the nation’s general election campaign another factor supporting a stand-pat.
Economists expect the BOJ’s next move in December or January, a hike that would offer some support for the yen. One ex-BOJ official recently suggested that if the currency is in the 150 range, the bank would opt to move earlier rather than later.
–With assistance from Yuko Takeo.
(Adds more details, latest market moves)
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