Yen Strengthens Amid Dollar Weakness as Tokyo Signals Intervention Readiness

The Japanese yen gained strength against the U.S. dollar, euro, Australian dollar, and sterling following signals from Tokyo authorities about potential intervention to counter recent currency weaknesses. Analysts suggest near-term yen weakness could continue despite last week's BOJ hints at a slow pace of rate hikes.

The yen gained ground against the broadly weakened U.S. dollar on Tuesday, buoyed by the strongest signals yet from Tokyo authorities hinting at possible intervention. This comes as the Japanese currency hovered near recent lows relative to major counterparts.

The yen appreciated by 0.7% to 155.9 per U.S. dollar, extending gains from Monday after a Bank of Japan rate hike. It also rose 0.5% against the euro, Australian dollar, and sterling, even as it lingered near recent lows. Such signals have kept yen bears cautious, though continued near-term weakness is anticipated, following the Bank of Japan's indication of slow rate hikes next year.

In related developments, Finance Minister Satsuki Katayama affirmed Japan's freedom in addressing yen volatility. Meanwhile, the dollar remains pressured, with the euro and sterling firming slightly as a multi-year downtrend for the dollar is anticipated. Attention now shifts to U.S. GDP figures expected on Tuesday, though investor impact may be limited due to delayed data.

(With inputs from agencies.)