Yen Stabilizes After Brief Surge, Markets Eye Potential Intervention
Market Movements and Speculation Around Yen Intervention
By Rae Wee
Yen's Recent Performance and Market Reactions
SINGAPORE, Sept 3 (Reuters) - The yen held its gains on Thursday after a sudden, brief surge in the previous session that traders suspect may have been driven by government authorities, keeping pressure on the dollar ahead of a crucial U.S. jobs report.
The yen was last steady at 158.88 per dollar, having jumped 0.9% overnight, in a move that left market participants on alert for an official intervention from Tokyo.
Impact on Other Major Currencies
Its rally was broad-based, with the euro falling roughly 1% against the yen on Wednesday; sterling dropped 1.15%, with both currencies nursing losses in early Asia trade.
Expert Commentary on Intervention Speculation
"The yen rally was about 0.9% and it's not a big move, and I definitely don't think that was an intervention," said Carol Kong, a currency strategist at Commonwealth Bank of Australia. "But some market participants have speculated that the rally was caused by a rate check."
Broader Currency Market Trends
Since a rare joint yen-buying intervention between the U.S. and Japan on July 31, the yen has struggled to find lasting support, coming under pressure from still-wide interest rate differentials, fiscal worries and a renewed spike in energy prices.
In the broader market, the strength in the yen left the U.S. dollar on the back foot, with the euro up marginally to $1.1589. Sterling attempted a bounce from a three-week low and last bought $1.3482.
Performance of Other Key Currencies
The New Zealand dollar edged 0.07% higher to $0.5856, having slid 0.67% on Wednesday following a dovish hike from the country's central bank, while the Aussie held near a high of more than three months at $0.7166.
Against a basket of currencies, the dollar eased 0.04% to 99.56. The Canadian dollar held to overnight gains and stood at C$1.3836, after the Bank of Canada stood pat on rates on Wednesday, though it signalled its readiness to tighten policy to rein in inflation.
Upcoming U.S. Jobs Report and Market Expectations
All eyes are now on Friday's U.S. nonfarm payrolls report, where analysts are forecasting an increase of 56,000 in jobs, following July's shock drop of 23,000, with unemployment holding at 4.1%.
Potential Impact on Federal Reserve Policy
It would probably need a much weaker outcome to greatly lessen the risk of a September rate hike from the Federal Reserve, with markets now pricing in a 61% chance of a move.
Market Sentiment Following Fed Chair's Speech
"After Fed Chair (Kevin) Warsh's hawkish Jackson Hole speech, I think markets are back to the idea that the Fed is prepared to take action in the near term to bring inflation closer to target more quickly," Kong said.
(Reporting by Rae Wee; Editing by Thomas Derpinghaus)
