– Every few trading sessions, the yen jolts higher against the dollar, and then it suddenly drops.
Most Read from Bloomberg That has become a recurring feature of yen trading in recent weeks, sparking debate among investors and strategists over whether Japanese authorities are trying to stem further weakness in the yen through smaller operations
On Thursday, the yen jumped as much as 0.5% against the dollar in just two minutes during New York trading before quickly surrendering those gains. A similar move happened on Tuesday, when it abruptly rose by roughly the same amount. On May 8, the yen also briefly climbed 0.2% before reversing course.
No one can say for certain what’s behind it, but traders are taking note because the moves may signal Tokyo’s unease over the yen’s weakness. Even the perception that authorities could intervene makes betting against the currency riskier. “My interpretation of the renewed activity is that the Ministry of Finance is uncomfortable with dollar-yen above 160 and wants to discourage another test of that level,” said Gareth Berry, a strategist at Macquarie Group Ltd. in Singapore. “These proactive nudges and warning shots — even before 160 is reached — point in this direction.” The momentary surges, appearing at different points from Tokyo through New York trading, come after a stretch of reported intervention in currency markets. While Japanese authorities have declined to comment on whether they stepped in, people familiar with the matter said intervention occurred on April 30, and analysis of the central bank’s accounts indicates Japan may have spent as much as around ¥10 trillion yen supporting the yen through the Golden Week holiday. “There’s caution over intervention, so a slight move can spook people,” said Marito Ueda, managing director at SBI FX Trade.