Japanese Yen hits one-week high against US Dollar on intervention speculation

The Japanese Yen (JPY) outperforms its major peers on Wednesday, with USD/JPY falling nearly 0.90% on the day as hawkish Bank of Japan (BoJ) expectations support the Japanese currency. A sharp drop during American trading hours raises speculation that Japanese authorities may have stepped into the foreign exchange market again after the pair briefly climbed above the 160 threshold.

However, there is no official confirmation of intervention. At the time of writing, USD/JPY trades around 158.75, its lowest level since August 24. The move spills over into the broader foreign exchange market, triggering selling pressure on the US Dollar (USD) and helping other major currencies recover.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades around 99.55 after reaching 99.86 earlier in the day, its highest level since August 14.

BoJ board member Hajime Takata strengthened hawkish policy expectations on Wednesday, saying the central bank needs “a more nimble approach with rate hikes” and “a different response from the conventional semiannual rate-hike pace.” Takata added that the BoJ should “consider a broad range of options, not just a 0.25% rate hike each time.”

BoJ Governor Kazuo Ueda said on Tuesday that the central bank will discuss whether to raise interest rates at its September 17-18 meeting as policymakers assess growing inflation risks. Ueda said the BoJ intends to keep raising rates if economic and price developments move in line with its projections.