The US Dollar was marginally weaker on Monday yet stayed near an eight-week high, whilst the Japanese Yen held near the 160 mark, fuelling intervention fears.
In early trading, the Yen depreciated to 159.94 per Dollar, marking its lowest level since 29th April. On that date, the Yen had reached a 34-year low of 160.245, prompting Japanese authorities to intervene by spending approximately 9.8 trillion Yen to bolster the currency, Reuters reports.
At the time of writing, the Yen was slightly firmer at 159.75 per Dollar following remarks by Japan's top currency diplomat Masato Kanda on Monday.
Kanda stated that authorities would intervene appropriately in case of excessive foreign exchange fluctuations, and clarified that Japan's inclusion on the US Treasury's monitoring list would not limit their actions.
“We will firmly respond to moves that are too rapid or driven by speculators,” Kanda said.
The Yen has faced renewed downward pressure following the Bank of Japan's decision earlier this month to postpone reducing bond-buying stimulus until its meeting next month. As a result, the Yen has depreciated by 1.5% in June.
“I don't necessarily think that the act of breaking the psychological level is enough (for intervention) anymore,” said Simon Harvey, head of FX analysis at Monex.
“Authorities have told us that they care more about the pace and disorderly moves as opposed to individual levels.”
At the BOJ's June policy meeting on Monday, some policymakers advocated for timely interest rate hikes due to concerns about potential inflation surpassing expectations.
The Yen has declined by more than 10% against the Dollar this year, influenced by the significant interest rate gap between Japan and the United States.
All eyes this week will be on the US personal consumption expenditures (PCE) price index, considered the Federal Reserve's preferred measure of inflation, scheduled for release on Friday.
According to economists surveyed by Reuters, they anticipate the annual growth rate of the index to decrease to 2.6% in May. A lower-than-expected reading is forecast to strengthen expectations for a potential interest rate cut as soon as September, currently indicated by futures markets with a 70% probability, according to the CME FedWatch tool.
The Dollar index, measuring the currency against six rivals, stood at 105.66 at the time of writing, moving away from close to an eight-week top of 105.91 hit last week.