Yen backs off four-week high on profit-taking

Yen fell on Tuesday against a basket of major rivals, extending losses for the second day against the dollar and backing off four-week highs on profit-taking, as markets await confirmation of the BOJ’s suspected intervention in the forex market last Friday. 

Dollar’s gains are stymied by less aggressive remarks by Fed Chair Jerome Powell this week, which boosted the odds of multiple rate cuts this year.

The Price 

The USD/JPY pair rose 0.5% today to 158.73, with a session-low at 157.98.

The yen lost 0.1% on Monday, the first loss in three days away from four-week highs at 157.17 yen per dollar.

BOJ Intervention 

Bank of Japan’s daily operations data showed it spent upwards of nearly $22 billion on Thursday to prop up the currency. 

The yen marked strong gains against most major rivals even on Friday, raising speculation it might have intervened once again on Friday. 

The BOJ spent nearly $61.55 billion in late April to boost the yen and intervene back then. 

US Rates

Fed Chair Jerome Powell said in an earlier speech in Washington that latest consumer prices data bolsters confidence that inflation is returning to the 2% target sustainably, with three consecutive readings presenting better than expected results. 

Following the remarks, the odds of a 0.25% September rate cut by the Federal Reserve rose to a full 100% according to the Fedwatch tool, with a similar 100% likelihood of a rate cut in November.