The Japanese yen experienced significant depreciation against the U.S. dollar and euro, marking multi-year lows that sparked concerns among investors over possible intervention by Japanese authorities. The euro surged to its highest level against the yen since 2008 at 165.71, driven by positive business activity data in the euro zone, particularly in the services sector.
Meanwhile, the U.S. dollar reached a 34-year peak against the yen, climbing to 154.88 as market participants closely monitored the key threshold of 155, which could trigger actions from Japanese officials to stabilize the currency. Despite statements from BOJ Governor Kazuo Ueda emphasizing that interest rate hikes will not be solely aimed at boosting the yen, speculations remain rife regarding potential interventions around the upcoming Bank of Japan meeting. Helen Given, an FX trader, highlighted the significance of the 155 level for dollar/yen as a crucial psychological mark, especially following the lack of intervention at 152 and the possibility of market actions in conjunction with the meeting outcome.
As anticipation builds for the Bank of Japan's upcoming policy meeting, Japanese Finance Minister Shunichi Suzuki issued a strong warning on potential intervention to counter excessive yen movements, following discussions with U.S. and South Korean counterparts. The central bank is expected to provide updated forecasts at the meeting, with projections suggesting inflation will remain around the 2% target over the next three years, indicating a cautious approach to interest rate adjustments from near-zero levels. While the dollar witnessed a slight decline against the yen after U.S. business activity data showed a decrease to a four-month low, impacting the dollar index and prompting a temporary drop.