The yen was poised for its strongest weekly performance in over a year, supported by suspected interventions from Tokyo to prevent the currency from hitting 34-year lows. These interventions, totaling around $59.79 billion according to Bank of Japan data, created uncertainty among traders, especially as they occurred during periods of low market activity.
Vishnu Varathan, chief economist for Asia ex-Japan at Mizuho Bank, noted that Japan's strategic market actions aim for maximum impact, often leveraging the element of surprise. The yen's recent strengthening, nearly eight yen against the dollar since the beginning of the week, has drawn attention to the key 160 per dollar level that some believe authorities are keen to defend.
In contrast, the dollar faced broad weakness against other currencies, marking its worst week in almost two months. Traders awaited U.S. nonfarm payrolls data for further direction, following signals from Federal Reserve Chair Jerome Powell indicating a dovish stance on interest rates. Despite holding rates steady, the Fed hinted at potential future cuts given sluggish inflation progress.
The euro and sterling held steady against the dollar, with the former eyeing a modest weekly gain. The dollar index, reflecting the currency's performance against a basket of peers, struggled amid the Fed's less hawkish stance, set to record its worst weekly performance since March.
Tai Hui, APAC chief market strategist at J.P. Morgan Asset Management, suggested the Fed may cut rates once or twice this year, with a bias toward fewer cuts depending on inflation trends.
In the Asia-Pacific region, the Australian dollar inched higher, on track for a weekly gain, while the New Zealand dollar also saw marginal gains for the week.
Paraphrasing text from "Investing" all rights reserved by the original author.
