(Reuters) – The yen was under pressure on Tuesday, as traders waited for important U.S. inflation data which could either provide some relief for the beleaguered currency or push the dollar to its highest against the yen since 1990.
The dollar stood at 151.68 yen, near a one-year high of 151.92 hit on Monday. A break past last year’s 151.94 would mark a fresh 33-year high for dollar/yen.
The euro hit a fresh 15-year high versus the yen of 162.45.
The yen briefly jumped against the greenback in New York hours on Monday after striking the year-to-date low, which analysts attributed to a flurry of trading in options that come due this week rather than any intervention from Japanese authorities.
DTCC data from LSEG’s Eikon platform shows yen options worth a notional $3.5 billion with strike prices between 151.90 and 152 are due to expire between Wednesday and Friday.
Japanese authorities in September last year intervened in the currency market to boost the yen for the first time since 1998, after a BOJ decision to maintain its ultra-loose monetary policy drove the yen as low as 145 per dollar.
It intervened again in October 2022 after the yen plunged to a 32-year low of 151.94.
“Our base case is that we could have intervention if we break the 152 level,” said Yusuke Miyairi, an FX strategist at Nomura.
“What’s been surprising us is that (Japanese Ministry of Finance) verbal interventions have been less frequent and not that strong, so there is a possibility the level that could trigger intervention is higher, but our base case is 152.”
Outside of Asia, the main focus was on U.S. inflation figures due later on Tuesday, which will provide further clarity on the Federal Reserve’s interest rate path.
Fed Chair Jerome Powell and his chorus of policymakers have in recent days tried to push back against market expectations that the U.S. central bank was done with its aggressive rate-hike cycle.
“I think the dollar’s reaction to the data will be asymmetric, something in line or bellow will be a dollar sell, but I don’t think it will start a new trend, we are range bound in most currencies, apart from dollar/yen” said Miyari.
Sterling was at $1.2296 up 0.15% and the euro was at $1.0711, up 0.1%. That left the dollar index at 105.6, a fraction weaker on the day.
The pound was little moved by data that showed wages in Britain grew slightly less fast in the three months to September after rising at a record pace previously.
The Swiss franc was steady at 0.9012 per dollar, while Down Under, the Australian dollar was flat at $0.6376.
OPTIONS STRIKE PRICES BETWEEN 151.90 AND 152 YEN
Date of expiry Nov 15 Nov 16 Nov 17
Notional value of 2.6 548.7 351.1
options expiring billion million million
(USD)
