Yen Pressured by Dollar Strength

The Japanese yen traded around 158 per dollar on Thursday, hovering near three-week lows as the dollar strengthened following robust US private-sector activity data that reinforced expectations for further Federal Reserve rate hikes. Rising Treasury yields and elevated oil prices also highlighted mounting inflation risks, adding further pressure on the yen. Meanwhile, traders remained alert for possible intervention as the currency approaches the closely watched 160 level, with reports indicating that the Bank of Japan conducted a rate check with market participants last Friday. The BOJ's rate hike last week was seen as insufficiently hawkish, with two officials dissenting from the decision,. Elsewhere, S&P Global data showed Japan’s manufacturing growth slowed to a seven-month low in September, amid softer increases in output and new orders.

The Japanese yen weakened to around 157.6 per dollar on Wednesday, remaining under pressure and keeping traders alert for possible intervention amid an extended holiday in Japan. Tokyo has previously taken advantage of thin holiday liquidity to intervene in currency markets, while concerns intensified following reports that the Bank of Japan conducted a rate check with market participants last Friday. The yen also remained under pressure from a stronger dollar as hawkish comments from Federal Reserve officials reinforced expectations for further US interest rate hikes. Last week, the Japanese currency fell sharply after the BOJ raised rates in a widely anticipated move, with two policymakers dissenting from the decision. Governor Kazuo Ueda said the BOJ remains committed to raising rates and adjusting the degree of monetary accommodation as economic conditions evolve, while noting that accommodative financial conditions are expected to remain in place to support growth.

The Japanese yen consolidated near 157 per dollar on Monday after falling more than 2% last week, with traders remaining on alert for possible intervention as Japan begins a three-day holiday. Tokyo has previously used periods of thin holiday liquidity to intervene in currency markets, while concerns were heightened by reports that the Bank of Japan conducted a rate check with market participants late Friday. The yen weakened sharply last week after the BOJ raised interest rates in a widely anticipated move, with two policymakers dissenting from the decision. Governor Kazuo Ueda said the BOJ remains committed to raising rates and adjusting the degree of monetary accommodation in response to changing economic conditions, while noting that accommodative conditions are expected to remain in place to support growth. The yen also came under pressure from expectations that Japan’s rate-hiking cycle could move more slowly than the Federal Reserve’s.