Top currency diplomat Masato Kanda said on Monday that Japan was always ready to take action against excessive market moves, but traders ignored the warning after the last bout of intervention did little to stem the selling.
“Perhaps a few months ago that would have been heeded more by the market than it is now, because it’s not being backed up by any change in rates,” Tuckey said.
There is a chance of a further rate hike from the Bank of Japan in late July, which could help support the yen. But any durable rally is likely to require Federal Reserve interest rate cuts.
The dollar index, which tracks the currency against six peers, rose 0.3 per cent to 105.99, its highest since May 1.
Friday’s US personal consumption expenditure (PCE) inflation report will be key for currency markets. A lower-than-expected number could cause traders to raise their bets on Fed rate cuts this year, providing some relief to the yen.
The euro slipped 0.3 per cent to US$1.0683 after a European Central Bank policymaker talked up the chances of further rate cuts this year, a notably different stance from the Fed’s Michelle Bowman.
ECB governing council member Olli Rehn told Bloomberg that two more cuts this year seemed “reasonable”. That contrasted with Fed Governor Bowman, who said she did not expect any US rate cuts this year.
Australian inflation accelerated to a six-month high of 4 per cent in May, which had traders scrambling to price in a strong chance of a further rate hike by November and sent the Aussie dollar up 0.5 per cent, before it cooled to stand 0.1 per cent higher at US$0.6656.
Sterling dipped 0.3 per cent to US$1.2647 as the dollar strengthened.
The yuan was also getting squeezed by the dollar’s stubborn strength, with China seemingly having signalled some tolerance for a cheaper currency by gradually weakening the midpoint of the yuan’s daily trading range on the dollar.
The yuan, which has hugged the low side of its band for months, slumped to a seven-month trough on Wednesday of 7.2671 per dollar.
