Yen rallies as traders alert to intervention risk; U.S. payrolls in focus
Yen rallies as traders alert to intervention risk; U.S. payrolls in focus
By Harry Robertson and Satoshi Sugiyama Thu, July 2, 2026 at 8:41 AM UTC
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By Harry Robertson and Satoshi Sugiyama
LONDON/TOKYO, July 2 (Reuters) - The Japanese yen rose sharply against the dollar on Thursday as traders braced for possible intervention from Japanese authorities, who signalled a new approach to bolstering the chronically weak currency.
The yen rally helped knock the dollar down against its peers ahead of key U.S. jobs figures due later in the day, which are expected to show employment growth slowed slightly in June.
The U.S. dollar fell by as much as 0.9% to 161.115 yen and was last trading at 161.28, down 0.8%.
It was not immediately clear what drove the move and Japan's Ministry of Finance declined to comment. Traders and strategists offered differing opinions, with some speculating authorities had checked rates in the market, prompting jitters in the currency.
The yen has been trading at its lowest in 40 years, with the dollar bolstered by interest rates that are well above Japan's, and the AI stock market boom.
Sources told Reuters Japanese officials were abandoning their habit of telegraphing intervention risks, instead signalling a more targeted campaign to squeeze speculators and raise the cost of betting against the yen.
Officials were also avoiding any suggestion of a specific "line in the sand" exchange-rate level that would trigger action, in a more aggressive approach aimed at keeping traders guessing.
"We will have to wait for data to ascertain if this was intervention, but the timing of the move does suggest that it was," said Abbas Keshvani, Asia macro strategist at RBC Capital Markets in Singapore.
"We can get more (intervention). They have communicated that they wish to be more nimble in their intervention, rather than defend a specific line in the sand. So their new approach allows them to intervene more frequently."
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The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, fell 0.4% to 100.98.
It hit a one-year high of 101.8 last week as strong economic and inflation data caused traders to raise their bets on Federal Reserve rate hikes.
Sterling rallied 0.6% against the dollar to a two-week high of $1.335 on Thursday, while the euro rose 0.35% to $1.114.
U.S. PAYROLLS DUE
Many strategists said Japanese authorities could see Thursday and Friday as good days for intervention, when key U.S. jobs data could cause currencies to swing and trading volumes are lighter ahead of a U.S. public holiday on Friday.
Thursday's data is expected to show U.S. employers added 110,000 jobs in June, with the unemployment rate holding steady at 4.3%, according to the median estimate of economists polled by Reuters.
Jobs gains have exceeded expectations for the past three months, bolstering wagers on Fed rate hikes, although a sharp fall in oil prices in the wake of the U.S.-Iran framework peace agreement has reduced some pressure on the central bank.
Federal Reserve Chair Kevin Warsh said on Wednesday that inflation expectations and price risks had eased in recent weeks, while the ADP National Employment Report showed private employment rose less than expected.
"Today’s nonfarm payrolls report for June will be important in assessing the prospect of Fed rate hikes this year," said Lee Hardman, senior currency analyst at MUFG.
"To reinforce the U.S. dollar’s current upward momentum another robust employment increase and/or drop in the unemployment rate will be needed."
(Reporting by Harry Robertson in London and Satoshi Sugiyama in Tokyo; Additional reporting by Rae Wee in SingaporeEditing by Shri Navaratnam, Sam Holmes and Kate Mayberry)
Source: “AOL Money”
