The Japanese Yen stayed near its weakest level in nearly four decades on Monday, fuelling speculation that authorities could step in to support the currency, while the US Dollar remained steady after weaker-than-expected employment data reduced expectations of a near-term interest rate hike.
At the time of writing, the Yen was trading at around 162.26 against the Dollar, close to last week's 38-year low of 162.84, its weakest level since 1986. The currency briefly rebounded on Thursday following a sudden wave of buying, leaving market participants alert to the possibility of official intervention.
Meanwhile, the Dollar stabilised after recording its biggest weekly decline since April, pressured by a US payrolls report showing a marked slowdown in job growth in June. Combined with softer oil prices, the data have tempered market expectations that the Federal Reserve will raise interest rates later this month.
Investors are now turning their attention to the minutes of the Federal Open Market Committee's (FOMC) June meeting, due on Wednesday, for further signals on the interest rate outlook.
Federal Reserve Chair Kevin Warsh has offered few indications so far, apart from warning last week that those expecting the central bank to take a softer stance on inflation, even as price pressures have eased recently, could be disappointed.
The Dollar index, which measures the US currency against a basket of six major peers, climbed to a 13-month high last week before retreating as expectations of a July interest rate hike continued to diminish, Reuters reports.
The Yen remained under close watch, with concerns over possible intervention by Japanese authorities keeping traders cautious, although many analysts believe any move by Tokyo would provide only temporary support for the currency.
Investors are also wary that Japanese authorities may be moving away from their usual practice of signalling potential intervention in advance, opting instead for a more targeted approach aimed at catching speculators off guard and making it more costly to bet against the Yen.
In addition, the Euro edged down slightly to $1.1422 but remained close to its highest level in two weeks, while the British Pound slipped 0.1% to $1.3338.
Furthermore, the South Korean Won weakened by 0.3% to 1,535 against the Dollar on the first day of round-the-clock onshore spot trading.