The yen was heading for its biggest weekly gain in 17 months on Friday, helped by Japan’s alleged intervention this week to push the currency away from 34-year lows, while the dollar index fell to a plus three-week low ahead of US jobs data.
The yen hit a three-week high of 152.75 per dollar in Asian trading and is expected to post a weekly gain of 3.2%, the biggest since early December 2022. It had been rising lately by 0.3% to 153.20 per dollar.
Traders remained expectant for further sharp swings in the yen after Tokyo was suspected of intervening to prop up its currency this week, Monday and Wednesday, to the tune of 9.16 trillion yen (59.8 billion dollars), as data from the Bank of Japan suggests.
“The market was extremely short the yen before this week’s suspected foreign exchange intervention. Many investors will remain in profitable positions,” said Jane Foley, head of foreign exchange strategy at Rabobank.
“But given the likelihood that the Treasury will be able to take greater advantage of the weakened conditions due to this week’s holidays and holidays in the UK and Japan on Monday, some will probably be inclined to take their profits.”
Speculators held their biggest bearish bet on the yen in seven years in dollar terms during the week ending April 23, according to the US markets regulator…
Francesco Pesole, currency strategist at ING, recalling the fall of the yen after Japan’s intervention in the foreign exchange market in September 2022, said that “the second round of interventions in a week, deployed after an FOMC (Federal Open Market Committee) less optimistic than expected on Wednesday, sent the markets the message that the finance ministry is less tolerant of a depreciation of the yen after the intervention this time.
The Fed held interest rates steady, as expected, following its two-day monetary policy meeting on Wednesday.
Traders now turn their attention to U.S. nonfarm payrolls data due at 1230 GMT, after Federal Reserve Chairman Jerome Powell told reporters that interest rates may have to stay high for longer, but rejected the idea of further rate increases.
The dollar index, which measures the currency against six other currencies including the yen, fell 0.1 percent to 105.18 after hitting its lowest level since April 11. It was heading for its biggest weekly decline in almost two months, falling 0.86% this week.
“Today’s U.S. jobs numbers are a major event for markets, as details of the jobs report will be a key test for the most bullish bets on Fed rate cuts,” he said. added Mr. Pesole.
Elsewhere, the euro rose 0.19% to $1.0745 and was aiming for a weekly gain of 0.5%, the biggest since March.
Sterling rose 0.16% to $1.2556 and was also poised for its biggest weekly gain in two months, rising 0.5% this week.
BANK NORGE MAINTAINS ITS RATE
The Norwegian krone rose after the Norwegian central bank kept interest rates at 4.50%, as analysts unanimously expected, and said borrowing costs could remain higher for longer than expected .
Norges Bank said in March it could start cutting rates in September, while they are currently at their highest level in 16 years.
“The new guidance suggests that monetary policy easing may be delayed beyond this date (September),” said Charlotte Ong, European FX strategist at HSBC.
“For now, the Norwegian krone can find some relief, but the short-term outlook remains challenging.
She added that Norges Bank recently increased its daily foreign exchange purchases to 550 million crowns, up from 350 million crowns previously, which could dampen sentiment around the currency.
The Norwegian krone hit its highest level since April 24, and was last up 0.65% at 10.9190.
