LONDON SINGAPORE The yen rose on Tuesday on news of a meeting of Japan's finance ministry and central bank, while the dollar rose to a two-month high against a basket of its peers following the U.S. debt ceiling deal.
The dollar was down 0.18 per cent against the Japanese yen at 140.18 after the government said senior officials from the Ministry of Finance, Bank of Japan and Financial Services Agency will meet from 5: 30 p.m. 0830 GMT.
Investors have been key to Japanese central bank policy in recent years, as theBOJ has played a significant role in boosting the yen. The focus has been on whether and when it will change its monetary policystance this year.
FX intervention is unlikely at current levels, said Kenneth Broux, head of corporate research for FX and rates at Societe Generale.
I think the barrier is higher for active dollar sales, he said. This is the start, trying to slow the speed of yen weakness Jane Foley, head of FX strategy at Rabobank, said the meeting was unlikely to bring about a change in policy, but it may bring a change in temperature with regard to policy.
Elsewhere, the dollar index, which measures the U.S. currency against six major peers, rose 0.2 per cent to 104.51, its highest in 10 weeks.
It seems to be win-win on almost any scenario for the dollar right now, Foley said.
Last week the dollar was gaining on safety-haven demand in case the U.S. defaults, this week you can say the dollar is gaining because the U.S. isn t going to default. She said attention was turned to whether the U.S. Federal Reserve can hike interest rates again, probably not in June but possibly in July.
She said that both a rethinking of market positioning - people had been dumping a lot of long dollar positioning since the end of last year - were supporting the dollar.
President Joe Biden and Republican House speaker Kevin McCarthy signed an agreement to temporarily suspended the debt ceiling and cap some federal spending to avoid a debt default.
A handful of hard-right Republican lawmakers said they would oppose a deal to raise the U.S.'s $31.4 trillion debt ceiling, highlighting risks to it reaching Congress before the limit is reached, likely by next Monday.
The euro was down 0.28 per cent at $1.0674, while the pound was down 0.13 per cent at $1.2345.
China's onshore yuan, meanwhile, eased to as soft as 7.0995 percent, after the central bank set the fixing at the yuan's weakest level since December. The yuan also weakened past a key level of 7.1 per dollar.
Turkish lira slipped further and weakened to a record low after Prime Minister Tayyip Erdogan won the presidential election on Sunday.