USD/JPY climbs above 162 as Japan warns of possible FX action
The yen fell to a fresh 1986 low as higher U.S. Treasury yields and rising odds of a September Fed hike lifted the dollar, while traders watched Fed Chair Kevin Warsh and U.S. data for policy signals.
USD/JPY rose above 162, reaching as high as 162.77 in early Asian trading, as the yen slid to a fresh 1986 low and markets stayed alert for possible Japanese intervention. The move was driven by a broader dollar rally tied to higher U.S. Treasury yields and stronger expectations that the Federal Reserve could raise rates in September rather than cut them. The benchmark 10-year Treasury yield was around 4.461% on Wednesday morning, with the 2-year near 4.17% and the 30-year also higher. CME FedWatch indicated markets saw roughly a 66.9%-67% chance of at least a quarter-point Fed hike at the September meeting and a 66.3% chance of no change in July. Investors were also watching Fed Chair Kevin Warsh's appearances at the European Central Bank forum in Sintra, Portugal, alongside upcoming ISM Manufacturing PMI, ADP employment data and Thursday's nonfarm payrolls report. The euro slipped 0.07% to $1.1413, sterling fell 0.09% to $1.3252 and the dollar index stood at 101.24. Some traders saw Friday's U.S. holiday-thinned liquidity as a possible window for Tokyo to buy yen.
- USD/JPY: The exchange rate showing how many Japanese yen are needed to buy one U.S. dollar.
- intervention: Official action in currency markets, typically involving buying or selling a currency to influence its value.
- nonfarm payrolls: A closely watched U.S. employment report that measures job growth outside the farm sector and can shift interest-rate expectations.