Yen Holds Steady Amid Intervention Fears and Japan's Golden Week Holiday
Currency Market Movements and Economic Developments
By Gregor Stuart Hunter
Yen Stability and Suspected Intervention
SINGAPORE, May 4 (Reuters) - The yen stabilised at the start of trading in Asia, strengthening slightly after a few choppy sessions following suspected intervention by authorities to strengthen the currency last week.
The yen edged up 0.1% to 156.885 against the dollar, after the Japanese currency appreciated 1.4% during the past month - a gain almost entirely attributable to the move on Thursday after authorities were widely suspected to have stepped in.
Tokyo officials declined to confirm whether they had intervened, but sources told Reuters the authorities did undertake yen-buying activity for the first time in two years.
Effectiveness of Intervention
Analysts questioned whether unilateral intervention, the third such effort in the past four years, would prove effective.
Market Focus and Potential for Bilateral Action
"The primary focus will be whether further intervention occurs, noting that Japan is closed for the Golden Week holiday and there will be thinner liquidity during this time," said Mahjabeen Zaman, head of FX research at ANZ Bank in Sydney.
"And more importantly, whether the U.S. will join Japan's efforts in supporting the yen," she added. "If the yen weakens further, you could argue that the likelihood of bilateral intervention increases."
Broader Market Reactions
Markets remained cautious at the start of trading after President Donald Trump said the U.S. would start an effort on Monday morning to free ships stranded in the Strait of Hormuz as a "humanitarian gesture" to aid neutral countries in the U.S.-Israeli war with Iran.
The U.S. dollar index, which measures the greenback's strength against a basket of six currencies, was flat at 98.144.
Performance of Other Major Currencies
The Australian dollar was up 0.1% at $0.7211, while its kiwi counterpart advanced 0.2% to $0.5905.
Reserve Bank of Australia Policy Decision
The Reserve Bank of Australia is due to announce its next policy decision on Tuesday, with the majority of analysts polled by Reuters expecting a hike in the cash rate to 4.35%. Last week, Australia's top two grocers warned of growing price pressures as the Iran war drives up fuel and raw material costs for suppliers.
The euro was up 0.1% at $1.1730 after German Chancellor Friedrich Merz sought to downplay a rift with Trump after a planned troop drawdown was announced. The country's economy ministry said on Sunday that Berlin is also in touch with the European Commission as it holds talks with Washington, after Trump said on Friday he would increase tariffs on cars and trucks from the EU to 25%.
The British pound was up 0.1% at $1.3586.
Cryptocurrency Movements
Bitcoin was down 0.1% at $78,824.22, while ether nudged 0.1% higher to $2,331.95.
(Reporting by Gregor Stuart Hunter)
