Yen Surges Amid Speculation of Intervention as Global Markets Await Key Meetings

Japan's yen hit a six-week high, stirring speculation of official intervention, while the dollar experienced broad losses ahead of anticipated U.S. rate cuts. Market focus shifts to a European Central Bank meeting. The Australian dollar gained slightly on mixed jobs data, and the euro stayed strong. Traders noted potential Bank of Japan intervention.

Japan's yen surged to a six-week high on Thursday, triggering speculation of official intervention, while the dollar faced broad losses with markets eyeing potential U.S. rate cuts and awaiting a European Central Bank (ECB) meeting. The euro stood firm at $1.094, near its four-month peak from Wednesday, as markets anticipated an ECB hold on rates but signaled potential future cuts.

The Australian dollar got a minor boost from mixed jobs data, trading at $0.6738, while sterling remained steady at $1.3001, just below its one-year peak from the previous day. The yen's sharp rally saw it touch 155.37 per dollar early Thursday before stabilizing around 156.35, a significant climb from its position a week ago.

Data from the Bank of Japan suggested that the authorities might have bought nearly 6 trillion yen ($38.37 billion) last week. Traders remarked that this week's movements hinted at further intervention or at least market sensitivity to such prospects. National Australia Bank's strategist Rodrigo Catril noted that many traders and investors were reevaluating their positions after significant moves earlier in the week. This reevaluation comes as net yen short positions reached a 17-year high last week.

Interest rate market pricing reflects expectations of over 60 basis points in U.S. rate cuts this year and approximately 20 basis points of hikes in Japan, which narrows the wide rates gap and has affected large short positions in the yen. U.S. presidential candidate Donald Trump's comments on the dollar's strength and the yen and yuan's weakness also unsettled markets.

Despite being the worst-performing G10 currency against the dollar this year, losing more than 9%, the yen's recent movements have pushed it into the spotlight. Meanwhile, China's yuan firmed slightly ahead of a key leadership meeting in Beijing, last trading at 7.2576 per dollar. New Zealand's dollar also saw movement, holding around $0.6071 after domestic inflation concerns cooled imminent rate cut bets. ($1 = 156.3600 yen).

(With inputs from agencies.)